Friday, 20 Jun, 2025
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The 2025-26 Budget strengthens EV sector by removing Basic Customs Duty on key battery materials, enhancing domestic manufacturing and reducing import dependence. While supporting the electrification drive, persistent infrastructure and adoption challenges demand continued policy backing and private investment to sustain long-term growth.
India’s electric vehicle (EV) adoption is gaining momentum, with EVs making up more than 7 per cent of total registrations in 2024—up from less than 2 per cent in 2021. Leading the shift are Assam, Delhi, Goa, Karnataka, and Tripura. Notably, the PM E-Drive scheme, launched in September 2024, is set to accelerate this trend by offering incentives and expanding charging networks. Karnataka leads in public charging stations, followed by Maharashtra and Uttar Pradesh.
While the trajectory is promising, experts caution that sustained policy support and rapid infrastructure expansion will be crucial to keeping pace with rising demand. Two key concerns for EV buyers remain: driving range—due to limited charging infrastructure—and battery longevity. The high cost of lithium-ion batteries, which make up a significant portion of EV prices, has also been a barrier. However, with global lithium prices falling and battery technology advancing rapidly, costs are expected to decline, making EVs more affordable and accelerating adoption.
India needs approximately Rs 16,000 crore in capital expenditure to scale up public EV charging infrastructure and achieve over 30 per cent electrification by 2030, according to a FICCI report. The study, released in December, highlights that public charging stations currently operate at less than 2 per cent utilisation, making profitability a challenge. To become viable and scalable, utilisation must rise to 8-10 per cent by the end of the decade.
The Centre is, meanwhile, weighing an expansion of its EV policy to include investments in charging infrastructure, aiming to ease entry for global players seeking incentives. The existing policy, introduced in March last year, mandates foreign automakers to invest $500 million over three years in a manufacturing plant to qualify for concessional EV import duties, the Business Standard reported on February 20.
Yet, the framework has struggled to attract major carmakers, pushing the Ministry of Heavy Industries to reconsider its approach. Industry voices argue that excluding prior EV investments penalises early movers while giving late entrants an edge.
The luxury EV market saw modest growth of 6.7 per cent in 2024, with most brands experiencing a decline in sales. According to FADA data released in January, overall electric passenger vehicle sales rose nearly 20 per cent to 99,165 units. Tata Motors dominated with 61,496 units, followed by JSW MG Motors with 21,484 units.
Luxury automakers—including BMW, Mercedes-Benz, Volvo, Audi, and Porsche—sold 2,809 EVs, up from 2,633 in 2023. However, Jaguar Land Rover’s India EV sales were not included in the report.
Finance Minister Nirmala Sitharaman, in the 2025-26 Budget, announced key measures to strengthen the EV industry, including the removal of Basic Customs Duty (BCD) on critical minerals used in EV batteries. To boost domestic manufacturing, the government has exempted BCD on materials such as cobalt powder, zinc, lead, lithium-ion battery residuals, and other scraps.
Lower import duties on battery production minerals are expected to reduce EV battery costs, making electric vehicles more affordable and accelerating adoption.
Also, the Centre has expanded the list of exempted capital goods, adding 35 items for EV battery production and 28 for mobile phone battery manufacturing. This policy shift aims to enhance the domestic supply chain, reduce production costs, and accelerate India’s green energy and digital manufacturing goals.
