Budget 2026 EV Battery Manufacturing Boost: Extended Duty Relief and Rs 40,000 Crore Electronics Components Scheme

Finance Minister Nirmala Sitharaman announces batteries and electric mobility as core focus of Union Budget 2026-27 with customs duty exemptions and manufacturing support measures strengthening India's electric vehicle supply chain and reducing costs across clean mobility ecosystem. Budget extends basic customs duty exemption on capital goods for manufacturing lithium-ion cells to include equipment deployed for Battery Energy Storage Systems with expansion covering 35 additional equipment pieces for BESS applications. Strategic material support includes new exemptions on import of critical minerals including lithium cobalt and nickel essential for battery production reducing raw material costs. Government increases Electronics Components Manufacturing Scheme outlay to Rs 40,000 crore from Rs 22,919 crore capitalizing on investment momentum with commitments at double the initial target. Customs duty exemptions on lithium-ion cells and key inputs extended till March 2028 providing policy continuity for electric mobility ecosystem and enabling creation of robust EV infrastructure. Production-Linked Incentive scheme for Advanced Chemistry Cell targets 6,000 metric tonnes per annum integrated manufacturing capacity with sales-linked incentives of Rs 6,450 crore and capital subsidies of Rs 750 crore through competitive bidding. Scheme mandates stringent value addition quality benchmarks and phased localization targets ensuring globally competitive manufacturing reducing battery import dependence and strengthening energy security. Rare earth corridors established in mineral-rich states supporting permanent magnet manufacturing crucial for electric motors significantly bolstering domestic EV production and affordability. Budget provisions include 4,000 e-buses for Northeast and Purvodaya regions expanding public transport electrification and demonstrating government commitment to green mobility transition. Industry experts note duty relief measures lower high entry costs for local gigafactories with domestic production keeping economic wealth within India while boosting national stability and reducing foreign supply dependence.