- Govt removes 7.5-10% basic customs duty until 31 March 2029
- Policy supports India’s 50 GWh ACC battery manufacturing target
The Indian government has waived basic customs duty (BCD) on machinery used for lithium-ion cell manufacturing, reducing equipment import costs for battery producers and supporting domestic capacity expansion. The exemption covers machinery used across critical stages of battery production, including electrode processing, cell assembly, testing, and formation.
Earlier, lithium-ion cell manufacturing machinery attracted import duties of 7.5-10%, adding to the capital cost of setting up battery plants. The new technology-neutral exemption, valid until 31 March 2029, allows manufacturers across EV, consumer electronics, and energy storage applications to access duty-free machinery imports.
The policy comes as India attempts to build a domestic battery ecosystem under the 50 GWh Advanced Chemistry Cell (ACC) manufacturing programme while reducing dependence on imported lithium-ion cells and strengthening supply chains for electric vehicles (EVs) and renewable energy storage.
Supply analysis
Lithium-ion cell manufacturing requires specialised equipment for electrode preparation, coating, drying, winding, cell assembly, electrolyte filling, sealing, testing, and formation.
India currently imports a significant share of battery manufacturing equipment from established supply chains in China, South Korea, and Japan. The earlier 7.5-10% duty burden increased the landed cost of production lines and raised initial investment requirements for battery projects.
The duty waiver is expected to improve project economics for companies setting up domestic gigafactories.
India has targeted 50 GWh of ACC manufacturing capacity through its battery manufacturing programme. Lower machinery costs could support faster execution of projects awarded under this initiative.
Demand analysis
Domestic battery demand is expected to increase rapidly due to EV adoption and energy storage requirements.
India recorded more than 1.8 million electric vehicle registrations in Apr–Feb’26, driven mainly by electric two-wheelers and three-wheelers. Growth in EV penetration is expected to increase demand for locally produced lithium-ion cells.
Battery energy storage systems (BESS) are also emerging as a major demand segment as India expands renewable energy capacity. The government has been promoting storage solutions to support grid stability and renewable integration.
Market implications
The duty exemption could encourage investment in battery manufacturing by improving project economics. Lower equipment costs may support faster capacity additions and create opportunities across the battery value chain, including cell production, material processing, and recycling.
However, India remains dependent on imports for key battery raw materials such as lithium compounds, nickel, cobalt, and graphite. Long-term competitiveness will require the development of local processing capabilities, supply agreements, and recycling infrastructure.
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