By: ICN Bureau
Last updated : February 01, 2026 8:42 pm
The list of exempted items now includes 35 additional capital goods specifically for EV battery manufacturing
In the Union Budget 2026-27, Finance Minister Nirmala Sitharaman announced significant Basic Customs Duty (BCD) exemptions to bolster India's domestic clean energy and manufacturing ecosystems. The Budget proposes to extend the basic customs duty exemption given to capital goods used for manufacturing Lithium-Ion Cells for batteries, to those used for manufacturing Lithium-Ion Cells for battery energy storage systems
The Budget proposals for Customs and Central Excise aim to further simplify the tariff structure, support domestic manufacturing, promote export competitiveness, and correct inversion in duty, said Sitharaman while presenting the Union Budget 2026-27, in Parliament today.
The existing BCD exemption on capital goods for manufacturing lithium-ion cells used in batteries has been extended. This benefit is now set to continue for a further two years, until March 2028.
The exemption has been expanded to cover capital goods required for manufacturing lithium-ion cells for Battery Energy Storage Systems (BESS).
The list of exempted items now includes 35 additional capital goods specifically for EV battery manufacturing.
Sodium antimonate is a critical raw material used in the production of solar glass. To support the domestic solar industry, the Budget has introduced a full exemption of Basic Customs Duty on its import. The BCD on sodium antimonate was previously 7.5%. Effective from February 2, 2026, the duty has been reduced to nil.
These measures are designed to structurally lower capital expenditures for domestic "giga factories" and solar glass manufacturers, making "Make in India" energy solutions more globally competitive.
By incentivizing domestic production of both storage cells and solar glass components, the government aims to reduce strategic reliance on imports and accelerate the transition to sustainable energy.
Complementing these moves, the Budget also proposed a BCD exemption on capital goods required for processing critical minerals within India.
Giving a push to the nuclear energy sector, Sitharaman recommended extension of the existing basic customs duty exemption on imports of goods required for nuclear power projects till the year 2035 and expand it for all nuclear plants irrespective of their capacity. The Budget also proposes to provide basic customs duty exemption to the import of capital goods required for processing of critical minerals in India.
To promote biogas blending in CNG, the Budget proposes to exclude the entire value of biogas while calculating the Central Excise duty payable on biogas blended CNG.