Indian Finance Minister Nirmala Sitharaman announced a series of indirect tax measures in the Union Budget 2025 aimed at supporting various sectors, including electric vehicle (EV) battery manufacturing, medicines, and industrial goods.
As part of the proposal, Sitharaman revealed that critical minerals such as cobalt powder, waste scrap from lithium-ion batteries, lead, and zinc will be exempt from basic customs duty.
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This is intended to support domestic manufacturing of EV batteries, with 35 additional goods for EV battery production and 28 goods for mobile phone battery manufacturing also added to the list of exempted capital goods.
In her budget speech on February 1, Sitharaman also outlined a plan to rationalise the customs tariff structure for industrial goods.
Sitharaman proposed removing seven tariff rates in addition to the seven rates removed in the 2024 budget. The customs duties for 82 tariff lines subject to a cess will also be exempt from the social welfare surcharge.
According to the finance minister, the government has also focused on reducing the cost of importing medicines. Thirty-six life-saving medicines will be fully exempt from basic customs duty, while 37 more medicines and 13 new patient assistance programmes will be included in the exemption list, provided they are supplied free of cost to patients.
Other measures aimed at promoting exports include the exemption of wet blue leather from basic customs duty (BCD) and a reduction in the duty on frozen fish paste, which will now be taxed at 5 per cent instead of 30 per cent. This is expected to boost the manufacture and export of its related products.
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Additionally, the budget introduced measures to improve trade facilitation, including a two-year time limit, extendable by one year, for finalising provisional assessments under the Customs Act. The government is also incentivising voluntary compliance through new provisions for importers and exporters.
These tax measures are part of the government’s ongoing efforts to reduce costs, boost manufacturing, and facilitate trade in key sectors.