As the battery landscape in India continually evolves, the government is looking to support domestic production reducing the country’s dependence on imports. The Indian government has passed its Finance Bill marking the final stage of implementing the Union Budget 2025. Notably the Finance Bill includes a clause that ends the import duty for goods and machinery to make lithium-ion batteries for EVs and phones. This comes as the country looks to increase domestic production of batteries and bolster critical mineral supplies as demand is set to increase.

What will be exempt from import duties?

The Bill does not go into details about what specifically will see an end to import duty but instead mentions that “35 capital goods/machinery for use in the manufacture of lithium-ion battery for EVs and 28 capital goods/machinery for use in the manufacture of lithium-ion battery for mobile phones” will be exempt from import duties.

What does India’s current battery production landscape look like?

India has been slow to build out battery manufacturing capacity in comparison to China, Europe and North America with the country’s first gigafactory coming online in 2023. However, as demand increases and is forecast to continue to increase, the country is building out its domestic capabilities. The country’s production capacity is set to increase almost 10-fold by 2030, according to Benchmark’s Gigafactory Assessment.

What is driving battery demand in India?

Battery demand in India is driven by three key areas: electric 2&3 wheelers, electric passenger cars and sales of portables such as mobile phones.

The majority of battery demand in 2024 was estimated to come from 2&3 wheelers, over 6 GWh according to Rho Motion’s 2&3-Wheeler Outlook. Passenger car EVs were the next largest demand sector with over 100,000 sold in 2024, a 22% year on year increase, notably this battery demand still remains smaller than that of the 2&3 wheelers segment. By 2030 battery demand in these segments are both expected to exceed 30 GWh, with 2/3 wheeler demand growing over 370% and EV passenger car demand increasing over 800%.

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Portables demand in India has also seen strong growth in recent years. According to Rho Motion’s Portables Battery Outlook, over 148 million mobile phones were sold across the country in 2024, accounting for approximately 2.5 GWh of battery demand. By 2030 battery demand from mobile phones is expected to rise over 40%, underlining the importance of developing a domestic manufacturing capacity for mobile phone batteries. 

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