Customs Duty Exemptions Extended to 2029: Key Inputs

Policy move and what changed

The Centre has extended customs duty exemptions on several imported inputs used in making display modules, smartphone wireless charging systems, and lithium-ion batteries. The duty relief will remain in force until March 31, 2029, and takes effect immediately. The finance ministry issued three separate notifications to implement the basic customs duty (BCD) waiver on goods used in manufacturing these three key component areas. The intent, as stated in the coverage, is to reduce input costs and support fresh investments in electronics production in India.

Display module inputs that get duty exemption

A key set of exemptions applies to imported inputs used to manufacture display assemblies, especially those used in automotive, medical, and industrial equipment. The exempted inputs include display cells, backlight units, flexible printed circuit assemblies (FPCAs), frames, and anisotropic conductive film (ACF). By lowering the landed cost of these parts, the change can directly influence the bill of materials for locally assembled display modules. The beneficiaries are expected to include manufacturers building integrated display assemblies for non-consumer use cases.

Where the display exemption does not apply

The exemption does not apply to display assemblies meant for mobile phones, televisions, smartwatches, smart meters, or interactive flat-panel displays. This carve-out is material because the largest consumer display volumes are typically linked to smartphones and TVs. With the exclusion explicitly stated, the policy support is targeted at specific end markets rather than broad consumer electronics displays. For manufacturers, this means product mapping and end-use classification will matter for eligibility.

Wireless charging modules: components covered

The government has also extended customs duty concessions for components used in wireless charging modules for smartphones. The list includes NFC and inductor coil-related parts such as nano-crystalline assemblies, E-shields, PET liners, PC shims, coils, and neodymium iron boron (NdFeB) magnets. These items are commonly used in the mechanical and electromagnetic stack of wireless charging systems. The stated expectation is that concessions on such inputs can lower input costs for makers of these modules.

Lithium-ion batteries: machinery list expanded

In a parallel move, the Centre widened the list of machinery eligible for concessional customs duty for lithium-ion battery manufacturing. The revised notification covers 85 categories of equipment across nearly the entire battery production process, from material mixing and coating to welding, testing, inspection, and packaging. It also includes supporting systems such as solvent recovery, heat recovery, dust collection, and effluent treatment equipment. This matters because battery projects are capital equipment heavy and duty treatment affects upfront project cost.

How this fits into Budget 2025 changes on batteries

Separately, Union Budget 2025 announced the elimination of BCD on imports of a range of materials that go into making lithium-ion batteries, including lead, zinc, and cobalt, along with select capital goods for electric vehicle manufacturing. The budget also proposed a National Manufacturing Mission with emphasis on clean tech manufacturing, including EV batteries, motors and controllers, and grid-scale power storage batteries. It stated BCD would be removed from Sunday on 35 different types of capital goods used for lithium-ion battery manufacturing, and similar benefits were granted to equipment for cell phone battery manufacturing. The coverage also noted BCD removal on scrap lithium-ion batteries, cobalt powder, and additional critical minerals, where earlier imports attracted BCD of 2.5% to 10%.

Industry responses and the EV ecosystem angle

Automobile industry body SIAM said customs duty exemption on goods used to produce lithium batteries would enable creation of a robust electric vehicle infrastructure. SIAM President Shailesh Chandra also pointed to the continued exemption of BCD on capital goods used for manufacturing lithium-ion batteries, and to the extension of concessional duty benefits for lithium-ion cells and their parts used in manufacturing batteries for electric and hybrid vehicles for a further two years till March 2028. Deloitte Partner Harpreet Singh said the extension of customs duty exemptions on lithium-ion cells and key inputs used in lithium battery and EV manufacturing till March 31, 2028 provides policy continuity to the electric mobility ecosystem. Finance Minister Nirmala Sitharaman also proposed extending the BCD exemption for capital goods used for manufacturing lithium-ion cells for batteries to those used for manufacturing lithium-ion cells for battery energy storage systems.

Company lens: Exide’s export outlook and capex plan

Exide Industries expects exports to recover to around 8% of total revenue from the current 5% to 6%, citing recent announcements on India’s trade engagements with Western automotive markets such as the European Union and the US, and an exclusive tie-up with a European partner. The company said it will ramp up shipments once final details of tariff changes are available. Exide also indicated it is expecting incremental export revenue of about ₹400-500 crore. Separately, its board approved a further investment of ₹1,400 crore in wholly owned subsidiary Exide Energy Solutions Limited, which is setting up a greenfield multi-gigawatt lithium-ion cell manufacturing facility in southern India. Exide also cited healthy demand for lead-acid batteries, supported by rising automotive OEM offtake, steady aftermarket growth, increasing solar energy solution adoption, and higher power backup requirements.

Market context: tax cuts, demand recovery, and stock moves

A Reuters report dated January 30 said Exide Industries announced a 5% increase in profit for the third quarter, attributed to tax reductions that spurred sales to automotive companies, though partly offset by weaker exports. The report also linked broader auto and component demand to late-September tax cuts, citing industry data that vehicle sales surged 18% in the third quarter and noting the tax on batteries was decreased from 28% to 18%. After the Budget 2025 announcement on duty exemptions for battery inputs, one report said at 1:03 PM on February 1, 2025, Amara Raja shares rose 5.6% to ₹1,093.6 while Exide rose 3.8% to ₹388.9. Another market update said Exide was trading at ₹380.80, up 1.70% from a previous close of ₹374.45, after the BCD exemption announcement on inputs such as cobalt powder and lithium-ion battery scrap.

Key facts at a glance

Why the measures matter for electronics manufacturing

The display and wireless charging exemptions are narrowly defined, but they target components where import dependence can raise costs and slow down local value addition. For battery manufacturing, the machinery coverage is broad, spanning most steps of cell production and several environmental and recovery systems, which are often necessary for regulatory compliance and stable operations. In parallel, Budget 2025 measures on minerals and scrap can influence raw material availability and cost, including for recycling-linked supply chains. Taken together, the policies create a mix of input-cost relief and capex-related support, while keeping certain high-volume display categories outside the exemption scope.

What to watch next

Manufacturers will track how eligibility and end-use conditions are implemented, especially for display assemblies given the exclusions for consumer categories. Battery makers and new projects will also watch how quickly the expanded machinery list and the Budget 2025 capital-goods changes translate into lower project costs. For exporters like Exide, the pace of ramp-up will depend on final details of tariff changes in key markets, as stated by the company. Policy timelines also diverge across measures, with some extensions discussed till March 2028 and others until March 31, 2029, making notification-level clarity important for planning.