Budget 2025: Boost for Clean Energy – Duty Exemptions on Cobalt Powder &waste, Scrap of Lithium-Ion Battery & 12 Critical Minerals

February 22, 2025

The Indian government has taken a significant step towards strengthening the clean energy and electric vehicle (EV) sectors. In Budget 2025, Finance Minister Nirmala Sitharaman announced the exemption of customs duty on cobalt powder & waste, scrap of lithium-ion batteries, Lead, Zinc, and 12 critical minerals, a move expected to accelerate India’s energy transition.

Why This Matters?

The demand for critical minerals like cobalt, lithium, and nickel is rising due to the global push for green energy and electric mobility. India, aiming to be a global hub for EV manufacturing and renewable energy, faces a challenge—these minerals are not readily available domestically. Reducing import costs through duty exemptions will make battery production more affordable, encouraging local manufacturing and reducing dependency on foreign suppliers.

Key Announcements in Budget 2025

The government has proposed 100% customs duty exemption on the following materials:

No.MaterialUse CaseOld BCD
(%)
New BCD
(%)
1Cobalt powder Used in lithium-ion batteries for EVs50
2Lithium-Ion Battery WasteRecycling and reuse of battery components50
3ZincEssential for battery cathodes50
4LeadConductive material for batteries50

Rare Earth Elements

1Unwrought TungstenUsed in electronics, aerospace, and defense50
2Unwrought MolybdenumUsed in steel alloys and electronics50
3Unwrought TantalumUsed in capacitors and electronic devices50
4Unwrought CobaltEssential for high-performance batteries50
5Unwrought BismuthUsed in pharmaceuticals and industrial alloys50
6Unwrought Zirconium PowderUsed in nuclear reactors and electronics100
7Unwrought Antimony PowderUsed in flame retardants and semiconductors2.50
8Unwrought Beryllium PowderUsed in aerospace and military applications50
9Unwrought HafniumEssential for nuclear control rods100
10Unwrought RheniumUsed in high-temperature alloys50
11Unwrought Cadmium PowderUsed in batteries and coatings50
12Wrought CadmiumUsed in solar cells and nuclear applications50


Strategic Advantages


Lower EV Costs 
Battery prices contribute 30-40% of an EV’s cost. With reduced input costs, EVs could become more affordable for consumers.

Lithium-ion batteries (Cobalt, Lithium-Ion Battery Waste, Zinc, Lead)
Cobalt powder is critical for manufacturing and recycling lithium-ion batteries. These batteries are essential for electric vehicles (EVs), portable electronics, and renewable energy storage systems.

Aerospace & Defense (Unwrought Tungsten, Unwrought Beryllium, Unwrought Hafnium)
Tungsten is used in high-temperature and wear-resistant components in aircraft and missiles.
Beryllium is used in lightweight, high-strength aerospace structures.
Hafnium is crucial for nuclear control rods in submarines and space applications.

Electronics & Semiconductor Industry (Unwrought Tantalum, Unwrought Antimony, Unwrought Cadmium, Wrought Cadmium)
Tantalum is widely used in capacitors for smartphones, computers, and high-performance electronic circuits.
Antimony is used in semiconductors and flame retardants for electronic applications.
Cadmium is essential for solar cells and coatings in electronic devices.

Steel & High-Temperature Alloys (Unwrought Molybdenum, Unwrought Rhenium)
Molybdenum is an important alloying element in steel to improve strength and corrosion resistance.
Rhenium is used in superalloys for jet engines, turbines, and other high-temperature applications.

Nuclear & Energy Sector (Unwrought Zirconium, Powder & Unwrought Hafnium)
Zirconium is essential for nuclear reactor fuel cladding due to its corrosion resistance.
Hafnium is used in nuclear control rods to regulate fission reactions safely.

These materials play a crucial role in modern industries, advancing technology, sustainability, and national security.

 

Government’s Potential Push Due to Exemption of Basic Customs Duty (BCD) on Critical Minerals

 

Boosting Domestic Manufacturing & Battery Ecosystem – 
The exemption will encourage investment in EV battery production, energy storage systems, and battery recycling. This will help reduce import dependency and promote a circular economy for critical minerals.

Strengthening India’s Semiconductor & Electronics Industry – 
By making essential materials like tantalum, antimony, and cadmium more affordable, the government will incentivize domestic chip manufacturing, electronics production, and semiconductor industry growth under initiatives like Make in India and Atmanirbhar Bharat.

Promoting Aerospace, Defense, and Nuclear Self-Reliance – 
Easier access to tungsten, beryllium, and hafnium will accelerate indigenous defense manufacturing, aircraft production, and space technology advancements. The nuclear sector will also benefit from improved availability of zirconium and hafnium, supporting India's clean energy expansion.

Expanding Steel & High-Temperature Alloy Production – 
The exemption will strengthen domestic alloy and special steel industries by reducing costs of key elements like molybdenum and rhenium. This will position India as a hub for advanced metallurgy, benefiting sectors like aerospace, defense, and industrial manufacturing.

Accelerating Renewable Energy & Clean Tech Adoption – 
With cost-effective access to critical minerals like cadmium for solar cells and lithium-ion battery components, the government will push for faster adoption of solar energy, energy storage solutions, and sustainable technologies, supporting India's transition to a green economy.