India’s Union Budget 2026 has delivered a boost to the electric vehicle (EV) ecosystem and the wider clean-energy push, with Finance Minister Nirmala Sitharaman outlining a set of tax and customs-duty measures in her Parliament speech focused on batteries, energy storage and cleaner fuels.
A key announcement was the continuation of the basic Customs Duty exemption on capital goods used to manufacture lithium-ion battery cells. The scope of this relief has also been widened to include machinery and equipment used to produce lithium-ion cells for battery energy storage systems (BESS). The government expects the move to lower manufacturing costs and encourage companies to set up new units or expand existing battery facilities in India.
Because batteries are among the most expensive and essential components of an electric vehicle, the policy is expected to provide an indirect lift to EV production and adoption. The measure also addresses the growing importance of lithium-ion batteries in renewable-energy integration, where storage helps manage intermittent power from solar and wind sources. By extending incentives to energy storage, the Budget aims to strengthen clean-energy infrastructure and cut reliance on imports, a step industry watchers say could move India closer to self-reliance in advanced battery technology.
The Finance Minister also announced a customs-duty exemption for imported capital goods required to process critical minerals within India—materials that are central to battery manufacturing and several clean-energy technologies. The intention is to build domestic mineral processing capability and support the long-term expansion of both the EV and renewable-energy sectors.
On cleaner fuels, Sitharaman said the full value of biogas will be excluded when calculating central excise duty on biogas-blended CNG. The change is designed to encourage wider adoption of biogas as a more sustainable fuel alternative, and is expected to support waste-to-energy initiatives while promoting greener transport fuels.
Taken together, the Union Budget 2026 signals strong government backing for clean mobility, local manufacturing and sustainable energy, using targeted duty exemptions and tax relief to make electric vehicles and cleaner fuels more cost-effective and appealing.
