What customs duty benefits are extended for EV battery manufacturing in the Union Budget 2026-27?

The Union Budget 2026-27 extends customs duty exemptions on capital goods used for manufacturing lithium-ion cells and battery energy storage systems, along with concessional duty benefits for lithium-ion cells and their parts for EV and hybrid vehicles until March 2028.

How does the Union Budget 2026-27 support the growth of India's EV ecosystem?

The budget supports India's EV ecosystem by extending customs duty exemptions on battery manufacturing components, increasing capital expenditure to Rs 12.2 lakh crore, and allocating 4,000 e-buses for sustainable public transport.

What is the capital expenditure target for 2026-27 according to the Union Budget?

The capital expenditure target for 2026-27 has been raised to Rs 12.2 lakh crore, a significant increase from the previous year, aiming to stimulate demand and industrial activity.

Home / Business and Economy / EV Dream Fuels: Budget Boosts Battery Production

EV Dream Fuels: Budget Boosts Battery Production

1 Feb

Summary

Budget extends customs duty exemption for lithium-ion battery manufacturing goods.
Extended benefits aim to create a robust electric vehicle ecosystem in India.
Capital expenditure target raised to Rs 12.2 lakh crore for 2026-27.

EV Dream Fuels: Budget Boosts Battery Production

The Union Budget 2026-27 introduces measures to bolster India's electric vehicle (EV) infrastructure by extending customs duty exemptions.

These exemptions now cover capital goods essential for manufacturing lithium-ion cells and battery energy storage systems. Concessional duty benefits for lithium-ion cells and their components used in EV and hybrid vehicle batteries are also extended for two more years, until March 2028.

This policy continuity is expected to foster a robust EV ecosystem in the country. The budget's focus on manufacturing and infrastructure is further highlighted by a significant increase in capital expenditure to Rs 12.2 lakh crore for 2026-27, providing impetus to industrial activity.

Additionally, the allocation of 4,000 e-buses for the Purvodaya regions is set to accelerate the adoption of sustainable public transport solutions. Other measures include support for rare earth corridors and biogas value inclusion in excise duty. The auto component industry anticipates navigating global challenges and strengthening India's position as a manufacturing hub.

Investments in infrastructure, including highways, are also expected to drive demand for luxury vehicles and support the construction equipment industry. Support for advanced electronics and EV component manufacturing, alongside critical mineral recycling, reinforces a circular economy for e-mobility.

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