India Slashes Import Duties on EV Battery and Mobile Phone Components

Government Moves to Shield Domestic Manufacturers from US Reciprocal Tariffs

In a significant policy shift, the Government of India has announced the removal of import duties on key components used in the manufacturing of electric vehicle (EV) batteries and mobile phones. The move, aimed at bolstering domestic production and export competitiveness, comes amid growing concerns over the impact of reciprocal US tariffs set to take effect from April 2.

“We aim to boost domestic production and enhance export competitiveness by reducing duties on raw materials,” said Finance Minister Nirmala Sitharaman, ahead of a parliamentary vote on the Finance Bill 2025.

Highlights of the Import Duty Exemptions

1. Electric Vehicle (EV) Batteries:

   • 35 components used in the manufacturing of EV batteries will now be exempted from import duty.

   • This is expected to reduce production costs for domestic EV manufacturers, helping accelerate EV adoption in India.

2. Mobile Phone Manufacturing:

   • 28 key components required for phone assembly and production will also be exempt from import duty.

   • The move will strengthen India’s position as a global smartphone manufacturing hub, benefiting companies like Apple, Samsung, and Xiaomi, which have major production facilities in the country.

Strategic Move to Counter Trump’s Tariff Policies

The decision comes as India prepares to mitigate the potential economic impact of new US tariffs introduced by Donald Trump’s administration.

• Trump’s reciprocal tariff policy, set to take effect from April 2, will impose higher duties on Indian exports to the US.

• To offset this, India is taking proactive measures to lower manufacturing costs domestically, ensuring that Indian exporters remain competitive in global markets.

“The government has been preparing to reduce the impact of Trump’s reciprocal tariffs, ensuring that local industries remain resilient and competitive,” said an official familiar with the trade negotiations.

India-US Trade Talks: Reducing Tariffs on $23 Billion in Imports

The policy decision aligns with India’s ongoing trade negotiations with the US. According to Reuters, the Indian government is considering reducing tariffs on more than half of US imports worth $23 billion as part of the first phase of a broader trade deal.

• The goal is to strengthen economic ties between India and the US while ensuring a level playing field for Indian manufacturers.

• The tariff reduction is expected to encourage investment from American companies in India’s EV and electronics sectors.

Boost for India’s Make-in-India and PLI Schemes

The duty exemption on EV battery and phone components will directly support the Indian government’s Make-in-India initiative and the Production Linked Incentive (PLI) scheme.

• For EV manufacturers, the duty cuts will reduce battery costs, making electric vehicles more affordable and accelerating India’s transition to green mobility.

• For smartphone makers, India already accounts for a large share of global production, and lower component costs will further solidify its position as a global electronics manufacturing hub.

Industry Reactions and Market Impact

Industry leaders and analysts have welcomed the decision, citing its potential to drive investment and job creation in the electronics and EV sectors.

• EV manufacturers like Tata Motors, Ola Electric, and Mahindra Electric are expected to benefit from reduced battery production costs.

• Smartphone giants like Apple, Samsung, and Xiaomi will gain from lower manufacturing expenses, potentially passing on cost benefits to consumers.

The move is also expected to spur foreign direct investment (FDI) in battery technology, semiconductor manufacturing, and EV infrastructure, further reinforcing India’s status as an emerging global manufacturing hub.