The government has lifted the import duty on parts for electric vehicle batteries

Finance Minister Nirmala Sitharaman announced on Tuesday March 5, 2025 that there will be no import duties on 35 capital goods which are essential to make EV batteries and 28 items used in the production of mobile batteries, in order to boost domestic manufacturing. 

This decision comes as a part of broader tariff adjustments which are specifically made to protect the local industries from the implications of upcoming US reciprocal tariffs.

The Finance Minister expressed her views on the decision by saying, “We are focussing on boosting domestic production and increasing the export by reducing duties on raw materials,”

As reported by the Financial Times on Tuesday, it was revealed that the American President is drafting a two-step strategy to introduce his latest tariffs. 

This could include using the emergency powers to impose tariffs on imports. As formal trade inquiries progress, authorities are particularly examining the legal frameworks that could expedite the implementation of tariffs.

Trade Discussions Between India and the US Under Tariff Strain

The Tariff reduction is part of India’s strategy, which is made to counter the potential economic impacts of US President Donald Trump’s reciprocal tariffs, which would be imposed by April 2. Both Nations are going through extensive negotiations to resolve the current trade disputes and come united on a bilateral trade agreement. 

A Reuters report on Tuesday, referencing two government sources, disclosed that New Delhi is willing to lower tariffs on more than half of the US imports valued at $23 billion as part of the initial phase of the suggested trade agreement.

Meanwhile, an Indian parliamentary committee recently suggested tariff reductions on imported raw materials, which will be providing support to the government's commitment to strengthen local manufacturing capabilities.