
Budget 2025-26: A Defining Moment for India’s Battery Industry & Middle-Class Growth
The Union Budget 2025-26 has put the spotlight on India’s clean energy future, and at the heart of it lies battery manufacturing. For years, battery makers in India have battled high raw material costs, import dependence, and policy uncertainty. This year’s budget, however, brings a much-needed boost to the industry with tax exemptions, strategic investment incentives, and a dedicated National Manufacturing Mission.
As someone deeply embedded in the EV ecosystem, I see this as more than just a set of fiscal policies—it’s a blueprint for India’s transition to becoming a global battery manufacturing powerhouse. But beyond the battery industry, this budget also delivers something India has long needed: relief for the middle class.
A Budget That Charges Up the Industry & the Economy
The government has made it clear that it is committed to building a strong domestic battery manufacturing sector. Here’s how:
1. Tax Exemptions: Cutting Costs, Boosting Competitiveness
One of the most significant announcements in this budget is the removal of Basic Customs Duty (BCD) on essential battery raw materials. This includes cobalt, lithium-ion battery scrap, lead, zinc, and 12 other critical minerals.
For battery manufacturers, this is a game changer. Why?
- Lower production costs: Battery production in India has been expensive, primarily because key raw materials had to be imported with heavy duties. With these tax breaks, manufacturers can source these materials at lower costs, making Indian batteries more affordable and globally competitive.
- Encouraging battery recycling: The exemption of BCD on lithium-ion battery scrap is a smart move. Recycling old batteries is crucial for sustainability, and this policy will help develop a more robust circular economy for batteries in India.
- Growth for both EVs and mobile batteries: The government has also removed duties on 35 new items used in EV battery production and 28 items for mobile phone batteries, ensuring that multiple industries benefit from these incentives.
2. The National Manufacturing Mission: A Clear Commitment to Clean Tech
The Indian government has introduced the National Manufacturing Mission, with a special focus on clean tech and energy storage. This initiative aims to support:
- EV battery production
- Motors and controllers for EVs
- Grid-scale power storage solutions
This is a strategic step. While most policy discussions focus on EV batteries, grid-scale storage is just as important. With India ramping up renewable energy projects, we need efficient battery storage systems to store solar and wind energy for round-the-clock power. This mission signals that India is thinking beyond EVs, aiming to build a strong energy storage industry that can support everything from electric mobility to power grids.
3. PLI Scheme: Attracting Big Investments
Another major highlight of this budget is the increased allocation for the Production-Linked Incentive (PLI) Scheme under the National Programme on Advanced Chemistry Cell (ACC) Battery Storage.
Here’s why this matters:
- The PLI scheme has already attracted major global and domestic players like Ola Electric, Reliance New Energy, Exide, and Amara Raja to invest in battery cell manufacturing in India.
- The additional funding will push more companies to invest, ensuring that India does not just assemble battery packs but actually manufactures advanced battery cells.
- This policy move aligns with the government’s broader vision to reduce dependence on Chinese imports and make India a self-reliant battery hub.
The Budget’s Bigger Picture: A Win for the Middle Class
This budget is not just about industries—it’s about empowering the backbone of India’s economy: the middle class. As Anupam Mittal pointed out in his LinkedIn post:
“For years, middle-class professionals have been India’s punching bag 👊 Taxed at every turn, squeezed for every rupee, while the ultra-rich found loopholes and businesses got tax breaks.”
But Budget 2025-26 has changed that.
The New Tax Regime now exempts income up to ₹12.75 lakh, giving salaried professionals more disposable income than ever before.
This is not just a tax cut—it’s a systemic correction. Historically, thriving economies have been built on strong middle classes.
🇺🇸 Post-WWII America bet on its working class → Manufacturing, housing, and consumer spending boomed.
🇨🇳 China in the 2000s focused on increasing middle-class incomes → Rapid economic expansion, global influence.
For too long, India got this equation wrong. Instead of fueling spending and investment, we squeezed the salaried class while businesses and the ultra-rich found ways around taxes.
This budget shifts that. More disposable income means:
✔️ Higher consumer spending
✔️ Greater investment in EVs, clean energy, and sustainable tech
✔️ A stronger domestic market that fuels manufacturing and job growth
“You don’t build an economy by making people feel gareeb. You build it by making them wealthier. 😎” – Anupam Mittal
This tax relief will directly impact the EV sector, as higher disposable incomes will make electric vehicles more accessible to the middle class. Combined with lower battery costs, EV adoption is set to accelerate across India.
What More Needs to Be Done?
While this budget is a huge step in the right direction, a few gaps still need to be addressed:
1. Faster Implementation of Policies
The PLI Scheme and tax exemptions are great on paper, but their real impact will depend on how quickly they are implemented. Battery manufacturers need:
🔹 Faster approvals for investments
🔹 Easier land acquisition for battery factories
🔹 Clear long-term policies to attract investors
2. Investments in New Battery Technologies
India’s battery industry is still largely focused on lithium-ion technology. While it is the dominant technology today, the future belongs to solid-state batteries, sodium-ion batteries, and hydrogen fuel cells.
👉 The government needs to provide R&D grants and innovation incentives to help Indian companies develop next-gen battery tech.
3. Strengthening Raw Material Supply Chains
Even though the budget removes duties on key raw materials, India still lacks domestic sources for lithium, cobalt, and nickel.
🔹 The government must fast-track domestic lithium mining projects in states like Karnataka, Jammu & Kashmir, and Rajasthan.
🔹 Strategic partnerships with countries like Australia and Chile (both rich in lithium reserves) will also help secure a stable supply of battery materials.
Final Thoughts: A Turning Point for India’s Battery Industry & Middle Class
The 2025-26 budget is a defining moment for India. The combination of tax exemptions, a dedicated National Manufacturing Mission, and an expanded PLI Scheme will give the battery sector the boost it has long needed. But beyond that, the relief given to the middle class marks a fundamental economic shift.
A wealthier middle class means:
✔️ Higher consumption
✔️ Stronger domestic demand for EVs & clean tech
✔️ A more self-reliant, resilient Indian economy
At All India EV, we will be closely tracking the impact of these budget decisions. What do you think—will this budget be a game changer for India’s battery industry and its middle class? Let’s discuss in the comments! 🚀🔋⚡