Budget 2026: FM announces customs duty exemption on capital goods for battery storage

In a significant move for the electric vehicle (EV) and renewable energy industries, India’s Finance Minister Nirmala Sitharaman unveiled the Union Budget 2026 on February 1. The budget highlights an extension of tax incentives for vital machinery and raw materials necessary for advanced battery manufacturing. The government is set to continue customs duty exemptions on capital goods essential for producing lithium-ion cells, a key component in battery technology. In a notable shift, this exemption now encompasses equipment used in the manufacturing of lithium-ion cells specifically for Battery Energy Storage Systems (BESS). Sitharaman stated, "I propose 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 too." This strategic decision aims to enhance support not just for the transportation sector, but also for the broader power grid, as India strives to store renewable energy more effectively.