Financial Budget ‘2023: A year of optimism for the Lithium-ion battery industry
The landscape of the Lithium-ion battery manufacturing industry in India is predicted to prosper multifariously due to the guidelines introduced in the Union Budget ‘2023. The Li-ion battery sector is deemed one of the eminent industries in the nation that are listed among the ‘Green Energy’ enterprises. The recent budget has delighted industry experts and illustrious players from the stated ecosystem as the honourable finance minister has announced the prolific regulations and guidelines that will render immense benefits to the clean battery manufacturing sector. It is noteworthy that the progress paradigm of the Li-ion battery segment in the nation has exhibited tremendous growth in recent years. As per recent statistics, the lithium-ion battery market size in India reached US$ 2.5 Billion in 2022 and with the dedicated endeavours of the government, the mentioned enterprise is anticipated to reach US$ 5.9 Billion by 2028, exhibiting a phenomenal Compound Annual Growth Rate (CAGR) of 14.8% during 2023-2028.
The recent budget has proposed a meticulous framework of guidelines which will propel the Li-ion battery manufacturing industry remarkably in the forthcoming financial year. Significantly, a major reduction in the customs duty levied on cell imports will enhance the domestic lithium-ion battery manufacturing sector. It is also projected that a vital reduction in the GST (Goods & Services Tax) levied on various BMS (Battery Management System) components will significantly increase the use of green transportation in India.
Exemption of duty/taxes: The fiscal budget ‘2023-24 has been cited as a catalyst for the commendable growth of the clean battery manufacturing industry in India. As per the announcement made by the finance minister, Battery Energy Storage Systems with a capacity of 4,000 MWH will be supported with ‘Viability Gap Funding’. The budget has aptly waived the customs tariff levied on the machinery required to manufacture lithium-ion cells for batteries, and the mentioned rebate of taxes is intended to encourage the mass adoption of EVs across the nation. According to market analysts, the union government’s decision to extend the custom duty exemptions for Li-ion cell manufacturing will revive the EV (Electric Vehicle) enterprise by facilitating a sizable domestic expansion of capacity, which has previously been prominently import-oriented. Consequently, the strategic introduction of multifaceted policies will lead to battery innovation at the domestic level, where the newly manufactured battery packs will be aptly customised to cater to Indian roads resulting in affordable and sustainable electric vehicles.
Accentuation of Green Mobility: The federal budget for the upcoming fiscal year has efficiently prioritised India’s goal of becoming a Net Zero Carbon Emission economy by 2070. To propagate the electric mobility revolution with greater proficiency, the current budget places a strong emphasis on the promotion of battery Energy Storage Systems (BESS). It reflects the government’s propensity to encourage the adoption of electric vehicles, enabling the development of a carbon-free country that depends on innovative, alternative fuel technology. Electric vehicles with or without batteries will be taxed at 5%, such an initiative will motivate the masses to opt for clean transportation.
National Green Hydrogen mission: Notably, the financial budget ‘2023 has exclusively allocated INR 35,000 Crores as the priority capital for the energy transition. It must be highlighted that with a dedicated budget of INR 19,700 Crore, the National Green Hydrogen Mission will aid in the transition to a low carbon economy, reduce reliance on fossil fuel imports, and position the nation to take the lead in both, the technological and commercial spheres.
Green Credit Programme: To further the incorporation of clean energy, the Union Budget ’2023 has announced the ‘Green Credit Program’ following the ‘Environment (Protection) Act’ to promote behavioural change. This would encourage ecologically responsible behaviour on the part of businesses, citizens , and local organisations while also assisting in the mobilisation of additional resources for such efforts. Evidently, ‘Green Energy’ enhancement is also one of the eminent 7 tenets of ‘Saptarishi’, introduced by the honourable finance minister targeted to mark a ubiquitous progression across the nation.
The financial budget for the FY 2023-24 has introduced a plethora of opportunities in the clean energy segment which will prompt the dynamic development of the Li-ion battery manufacturing industry in the forthcoming fiscal year.
About the founder:
Aditya Vikram is the Managing Director and CEO of Renon India Private Limited, a renowned energy storage company in India. With more than 12 years of experience, Aditya wants to make a long-term difference in the energy storage business.
