• India has removed import duties on key raw materials for EV batteries and mobile phones to boost domestic manufacturing and exports.
  • The move comes as India and the US negotiate a bilateral trade agreement amid tariff disputes, with potential duty reductions across multiple sectors.

India has announced the removal of import duties on several raw materials used in electric vehicle (EV) battery and mobile phone manufacturing. The decision, aimed at boosting domestic production and export competitiveness, comes as the country navigates trade discussions with the United States.

Finance Minister Nirmala Sitharaman confirmed the duty exemptions while presenting the Finance Bill 2025 in parliament.

“We aim to boost domestic production and enhance export competitiveness by reducing duties on raw materials,” Sitharaman said.

Under the new measures, 35 items related to EV battery manufacturing and 28 items used in mobile phone production will be exempt from import duties.

In the Union Budget 2025-26, Sitharaman proposed exemptions on key raw materials, including cobalt powder, lithium-ion battery scrap, lead, zinc, and 12 critical minerals. She also announced reduced tariffs on open cells and other components, adding 35 capital goods for EV batteries to the duty exemption list.

To further boost the sector, the government launched a National Manufacturing Mission aimed at supporting both MSMEs and large enterprises. The initiative is expected to enhance India’s manufacturing capabilities in cleantech industries such as solar cells and EV batteries.

India’s EV market, currently valued at $54.4 billion, is projected to more than double to $132.2 billion by 2030, driven by policy support and growing adoption.

India-US Trade and Tariff Negotiations

The decision to cut import duties comes as India and the US engage in discussions to resolve tariff-related disputes. The US, under Donald Trump’s presidency, has been pushing for reciprocal trade policies, imposing tariffs on nations with higher duties on American goods. Trump has emphasized a “fair trade” approach, proposing that the US should levy the same tariffs that other countries impose on American imports.

According to the World Trade Organization (WTO), India’s weighted average effective tariff rate on US imports is higher than the tariffs imposed by the US on Indian goods.

In an effort to address trade imbalances, both countries announced in February their intention to negotiate a Bilateral Trade Agreement (BTA). A joint statement confirmed that senior representatives from both governments would work towards a multi-sector deal by autumn 2025.

Reports suggest that as part of the trade negotiations, India may agree to lower duties across several industries, including gems and jewellery, automobile parts, textiles, and chemicals. In return, the US could reduce tariffs on specific Indian exports.

A parliamentary committee recently recommended tariff reductions on raw material imports to support local manufacturers. Additionally, a Reuters report cited government sources stating that India is open to cutting tariffs on more than half of US imports worth $23 billion as part of the first phase of the trade deal.

Edited by Harshajit Sarmah