Budget 2024: Government to especially focus on critical minerals for EVs

Finance Minister Nirmala Sitharaman in the budget speech of the Modi 3.0 administration for 2023, advocated a complete exemption from customs duties on critical minerals like cobalt and lithium, which are essential components of electric vehicle batteries.

During her budget presentation, FM said, "Minerals like lithium, copper, cobalt, and rare earth elements are critical for sectors like nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics."

"I propose to lower BCD (Basic Customs Duty) on two of these minerals and totally exempt customs taxes on 25 important minerals. This would significantly speed up the extraction, processing, and refinement of these minerals and ensure their supply for these vital and critical industries," she further said. 

She also stated, "To reduce their cost of production, I propose to remove the BCD on ferro nickel and blister copper," highlighting the importance of steel and copper as raw materials. Additionally, I'm keeping my concessional BCD of 2.5 percent on copper scrap and zero BCD on ferrous scrap and nickel cathode."

The budget speech further read, “We will set up a Critical Mineral Mission for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets. Its mandate will include technology development, a skilled workforce, extended producer responsibility framework, and a suitable financing mechanism”

Industry participants believe that the Finance Minister's action is crucial and will significantly reduce battery cell production costs, which will immediately translate into more reasonably priced electric cars (EVs) for customers. 

"EV batteries will become more affordable overall as a result of lower production costs, increasing the economic viability of electric vehicles. This initiative not only supports the growth of the EV industry but also reinforces India's commitment to sustainable mobility solutions," Pratik Kamdar, CEO & Co-Founder of Neurone Energy said.