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Finance Minister Reaffirms Commitment to Clean Energy and Domestic Manufacturing in Union Budget 2025

In her Union Budget 2025 address, Finance Minister Nirmala Sitharaman emphasized the government’s focus on bolstering India’s domestic manufacturing capabilities in clean energy. Key sectors such as solar cells and modules, electric vehicles (EVs), lithium-ion batteries, and high-voltage transmission equipment are set to receive policy and financial support under this initiative.

Highlighting the power sector as one of six key areas for India’s growth and global competitiveness over the next five years, Sitharaman underscored the importance of clean energy in driving economic development.

Increased Budget Allocations

The Budget reflects the government’s commitment to renewable energy through revised funding estimates:

• Solar Sector: Allocation increased from ?15,061 Cr to ?24,224 Cr,
• National Green Hydrogen Mission: Funding doubled from ?300 Cr to ?600 Cr.
• Green Energy Corridor: Allocation remained steady at ?600 Cr.
• Wind and Other Renewable Projects: Allocation reduced from ?846 Cr to ?551 Cr.

Solar Cell and Module Duty Revisions

In a major policy shift, the customs duty on solar cells has been reduced from 25% to 20%, and the duty on solar modules has been halved from 40% to 20%. This move is expected to make solar technology more affordable while encouraging domestic production under the government’s "Make in India" initiative.

National Manufacturing Mission for Clean Tech

A new National Manufacturing Mission was announced, aimed at supporting small, medium, and large industries involved in clean technology. The Mission will provide a comprehensive framework, including policy support and execution roadmaps, to promote domestic manufacturing of critical components such as solar PV cells, EV batteries, motors, controllers, electrolyzers, wind turbines, and grid-scale batteries.

Sitharaman stated, “This Mission underscores our commitment to climate-friendly development while building a robust domestic ecosystem for clean energy technologies.”

Critical Mineral Duty Exemptions

To address the scarcity of critical minerals essential for India’s clean energy transition, the government has eliminated customs duties on waste and scrap of materials like antimony, beryllium, bismuth, cobalt, cadmium, molybdenum, rhenium, tantalum, tin, tungsten, zirconium, and copper. Previously, these minerals faced duties ranging from 2.5% to 10%.

Further, waste and scrap of lithium-ion batteries, cobalt powder, lead, and zinc, which previously attracted a 5% duty, are now fully exempted. This follows the July 2024 decision to exempt basic customs duty on 25 critical minerals and reduce duties on others, aimed at boosting domestic processing and supporting micro, small, and medium enterprises (MSMEs).

These measures are expected to ensure a steady supply of raw materials for India’s clean energy manufacturing sector while creating new job opportunities.