Finance Minister Nirmala Sitharaman reaffirmed the government’s commitment to strengthening domestic value addition and enhancing India’s manufacturing ecosystem for solar cells and modules, electric vehicles (EVs), lithium-ion batteries, and high-voltage transmission equipment.

Presenting the Union Budget 2025, she noted that the power sector is among the six focus domains for India’s growth potential and global competitiveness during the next five years.

The Budget saw revisions in estimates for various energy programs. The allocation for the total solar sector has gone up from ₹150.61 billion (~$1.73 billion) to ₹242.24 billion (~$2.79 billion). The National Green Hydrogen Mission’s funding was raised from ₹3 billion (~$34.6 million) to ₹6 billion (~$69.24 million).

The expenditure for the Green Energy Corridor, however, remained unchanged at ₹6 billion (~$69.24 million). On the other hand, the outlay for wind power and other renewable energy projects has been reduced from ₹8.46 billion (~497.64 million) to ₹5.51  billion (~$63.59 million).

Duty Cuts on Solar Cells and Modules

The Budget introduced revisions to customs duties on solar cells and modules. The duty on solar cells has been revised from 25% to 20%, and the duty on solar modules from 40% to 20%.

Sitharaman said the government will set up a National Manufacturing Mission covering small, medium and large industries for furthering “Make in India” by providing policy support, execution roadmaps, governance and monitoring framework for central ministries and states.

“Given our commitment to climate-friendly development, the Mission will also support Clean Tech manufacturing. This will aim to improve domestic value addition and build our ecosystem for solar PV cells, EV batteries, motors and controllers, electrolyzers, wind turbines, very high voltage transmission equipment and grid-scale batteries

In a significant move to boost the availability of critical minerals essential for India’s clean energy transition, the Finance Minister eliminated customs duties on waste and scrap of several critical minerals, including antimony, beryllium, bismuth, cobalt, cadmium, molybdenum, rhenium, tantalum, tin, tungsten, zirconium, and copper. Previously subject to varying duty rates of 10%, 5%, and 2.5%, these minerals will now be exempt from import duties.

Waste and scrap of lithium-ion batteries, cobalt powder, lead, and zinc, which were previously subject to a 5% duty, have also been fully exempted.

This follows Sitharaman’s July 2024 Budget announcement to exempt basic customs duty on 25 critical minerals unavailable domestically and to reduce duties on two others, aimed at encouraging their processing, particularly by micro, small, and medium enterprises. These measures would secure raw material availability for domestic manufacturing and create employment opportunities for Indian youth.

The minister also noted that a policy for recovery of critical minerals from mine tailings will be announced.

Power Sector Reforms

The government has introduced incentives for electricity distribution reforms to improve the financial health and operational efficiency of distribution companies. Additionally, it will facilitate the augmentation of intra-state transmission capacity. Additional borrowing of 0.5% of the gross state domestic product will be allowed to encourage states to undertake reforms, provided they implement the prescribed changes.

EV Push

Further expanding the government’s push for EV adoption, the Finance Minister proposed adding 35 new capital goods to the list of exempted items for lithium-ion battery manufacturing. This move is expected to significantly bolster the domestic production of EV batteries, reducing dependence on imports and fostering self-reliance in the sector.

Regulatory Reforms

Sitharaman also announced that a high-level Committee for Regulatory Reforms will be established to review all non-financial sector regulations, certifications, licenses, and permissions. The committee is expected to make recommendations within a year.

The review’s objective is to strengthen trust-based economic governance and take transformational measures to enhance ‘ease of doing business’, especially in matters of inspections and compliance. States will be encouraged to join in this endeavor.

Sitharaman highlighted the importance of developing at least 100 GW of nuclear energy by 2047 to support the country’s energy transition in a significant step towards enhancing India’s nuclear energy capabilities. To achieve this goal, the government will amend the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to encourage active participation from the private sector.

A new Nuclear Energy Mission will be established, focusing on research and development of small modular reactors, with an allocation of ₹20,000 crore. This mission aims to operationalize at least five indigenously developed small modular reactors by 2033, marking a major milestone in India’s nuclear energy future.

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