Budget 2025: 2 key stocks picks in the EV battery space post basic custom duty exemption announcements

Budget 2025: Finance Minster Nirmala Sitharaman has proposed to add 35 additional capital goods for Electric Vehicle battery manufacturing, and 28 additional capital goods for mobile phone battery manufacturing for Basic custom duty exemption. This is expected to boost domestic manufacture of lithium-ion battery, for mobile phones & Electric Vehicles or EVs

Budget Positives

Speaking on the positive in Budget Manish Jain- Chief Strategy Officer, Institution Business, Mirae Asset Capital Markets highlighted benefits in the EV battery space along with other positives though there are certain pockets and sectors where he does not see any major benefits too.

Overall, it is positive for FMCG, Consumption, Retail, Realty, Auto and new-age companies, said Jain. Not as much positive for banking. A rise in gross borrowings is negative for banks as yield could rise, impacting treasury income—fiscal deficit target at 4.8% for FY25 and 4.4% of GDP for FY26. With rationalization in direct taxes, one needs to see how government capex targets are set, added Jain. Positive move on critical minerals and Basic Custom Duty exemption for EV batteries to promote EV battery manufacturing in India and positive for battery chemical manufacturers, highlighted Jain.

These initiatives will enable EV companies to increase their production and make affordable, high-performance electric vehicles that contribute to reducing pollution and driving the nation towards net-zero emissions, said Gunjan Malhotra, Co-founder, of Komaki Electric

Key benefits to EV sectors

Sagar Shetty, a research analyst at StoxBox said that with the Finance Minister’s announcement of exemptions from basic customs duty (BCD) for 35 additional capital goods for EV battery manufacturing, the space is poised to witness increased adoption driven by reduced production costs.

Moreover, the government has removed the BCD on essential materials like cobalt, lithium-ion battery scrap, lead, zinc, and 12 other critical minerals, which are key for the manufacturing of batteries, semiconductors, and renewable energy equipment.

"This move promotes higher levels of localisation among manufacturers, safeguards India's emerging EV market, and creates a conducive production environment. These initiatives, coupled with PM e-Drive and a strong focus on the 'Make in India, Make for the World' vision, the sector is now better shielded against the challenge of cheap imports," said Shetty.

Key Picks in the EV space

We believe Exide Industries Ltd and Amara Raja Energy and Mobility Ltd would likely be the key beneficiary given their position in the EV battery space.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment.