Tax Exemptions Boost Lithium-Ion Cell Manufacturing

Finance Minister Nirmala Sitharaman has announced a set of targeted tax and duty exemptions in the Union Budget 2026, aimed at strengthening India’s clean energy, manufacturing, and regional development agenda. The proposals focus on easing input costs for advanced battery production, renewable energy components, and cleaner transport fuels, while aligning with the broader goal of building domestic industrial capacity.

Customs Duty Relief for Battery Manufacturing

The Budget proposes the extension of basic customs duty exemption on capital goods used for manufacturing lithium-ion cells for battery storage. This move is intended to support domestic value addition in advanced energy storage technologies, which are critical for electric mobility and grid-scale renewable energy integration. By lowering the upfront cost of specialised machinery, the measure seeks to improve the competitiveness of Indian manufacturers and attract further investment into battery cell production.

Support for Solar and Critical Minerals Processing

In addition to battery manufacturing, the Finance Minister proposed a basic customs duty exemption on the import of sodium antimony for use in the manufacture of solar glass. The Budget also provides customs duty exemption on capital goods required for processing critical minerals within India. These steps are aimed at reducing import dependence in strategic sectors and strengthening supply chains for renewable energy and emerging technologies.

Excise Duty Relief for Biogas-Blended CNG

A key clean energy measure announced in the Budget is the proposal to exclude the entire value of biogas while calculating central excise duty on biogas-blended compressed natural gas. This policy change is expected to make biogas blending more financially viable, encouraging its adoption as a cleaner transport fuel and supporting waste-to-energy initiatives across urban and rural areas.

Important Facts for Exams

• Lithium-ion cell manufacturing is a core component of India’s energy storage and electric mobility strategy.
• Biogas-blended CNG combines renewable biogas with conventional natural gas to reduce emissions.
• Critical minerals are essential inputs for batteries, electronics, and renewable energy technologies.
• Customs duty exemptions are often used as policy tools to promote domestic manufacturing.

Industrial Corridors and Regional Development Focus

The Budget also outlines plans to develop an integrated East Coast Industrial Corridor with a well-connected node at Durgapur. Additional initiatives include the creation of five tourism destinations across five Poorvodaya states, deployment of 4,000 electric buses, and development of Buddhist sites in the northeastern region. Alongside these incentives, the government signalled its intent to rationalise customs duty exemptions on items already manufactured domestically or with negligible imports.