Budget 2024-25: 'Critical Mineral Mission' to boost EV battery production

In the Union Budget 2024-25 presented on Tuesday, Finance Minister Nirmala Sitharaman unveiled a significant initiative aimed at bolstering India's position in the critical minerals sector. The announcement of the Critical Mineral Mission represents a comprehensive strategy to enhance domestic production, facilitate overseas acquisition of critical mineral assets, and promote recycling efforts.

This strategic move is expected to have far-reaching implications for the electric vehicle (EV) industry and the renewable energy sector in India. Critical minerals, which are essential components in e-mobility and renewable energy technologies, will now receive focused attention under this mission. The policy framework encompasses various aspects, including technology development, workforce skilling, implementation of an extended producer responsibility framework, and the establishment of appropriate financing mechanisms.

The announcement builds upon the government's earlier indications in the interim budget presented in February 2024, where the Finance Minister had outlined the government's commitment to promoting energy security in terms of availability, accessibility, and affordability.

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As part of this initiative, the government has exempted 25 critical minerals from customs duties. These minerals, which include lithium, copper, cobalt, and rare earth elements, play crucial roles in various high-tech sectors such as nuclear energy, renewable energy, space exploration, defense, telecommunications, and advanced electronics.

The auto industry has welcomed this move, recognizing its potential to significantly boost the recycling and production of critical minerals in India. Shradha Suri Marwah, President of ACMA and CMD of Subros, highlighted that the reduction in customs duty to nil on critical minerals would encourage cell manufacturing in the country and contribute to the evolving EV ecosystem.

Nitin Gupta, co-founder and CEO of Attero, a leading battery recycling company, expressed optimism about the policy's potential to make India self-reliant in critical minerals and position the country as a global recycling hub. He emphasized that the exemption of customs duties on critical minerals would provide a major boost to the processing and refining sectors.

The initiative is seen as a significant step towards supporting the growth of the EV industry and reinforcing India's commitment to sustainable mobility solutions. Pratik Kamdar, CEO and co-founder of Neuron Energy, praised the decision, noting that it would substantially lower the production costs of battery cells, making electric vehicles more affordable for consumers.

Ola's Founder, Bhavish Aggarwal, described the Critical Mineral Mission as a potential game-changer for India's energy transition journey, also commending the emphasis on women's employment in the budget.

In addition to these measures, the Finance Minister announced the continuation of nil Basic Customs Duty (BCD) on ferrous scrap and nickel cathode, as well as a concessional BCD of 2.5 per centon copper scrap. These decisions are expected to further support the manufacturing and recycling industries in India.

Overall, the Critical Mineral Mission and associated policy measures represent a comprehensive approach to strengthening India's position in the critical minerals sector, with potential benefits for multiple industries and the country's broader economic and environmental goals.