The government announced on Tuesday a significant decision to eliminate import duties on a wide range of essential components used in the production of electric vehicle (EV) batteries and mobile phones. This move is part of a larger strategy aimed at slashing tariffs across multiple sectors to support domestic manufacturers as they prepare for the potential economic disruption stemming from U.S. President Donald Trump’s impending reciprocal tariffs, set to take effect on April 2. These tariffs are part of Trump’s broader “America First” trade policy, which seeks to impose levies on trading partners equal to what he perceives as the unfair burden placed on American exports.
Finance Minister Nirmala Sitharaman, addressing Parliament ahead of the Finance Bill 2025 vote, underscored that the primary goal behind the tariff cuts is to "boost domestic production, enhance export competitiveness, and ensure that Indian manufacturers remain resilient in the face of global economic pressures." She provided detailed insights into the exemptions, specifying that 35 critical items used in EV battery production — including lithium-ion cells, battery-grade nickel, cobalt, graphite, and electrolytes — would now be free from import duties. Additionally, 28 items vital for mobile phone manufacturing, such as camera modules, display assemblies, printed circuit boards, and semiconductors, would also enjoy duty-free status.
The decision reflects India’s strategic push to safeguard its industries from the impact of the U.S. tariffs, which have sparked concerns about a global trade slowdown. The Indian government has been engaged in intense diplomatic talks with the U.S., aiming to negotiate a more balanced trade arrangement that mitigates the potential damage to key sectors.
A Reuters report, citing two senior government sources, revealed that India is open to cutting tariffs on more than half of U.S. imports — worth an estimated $23 billion — as part of the first phase of a larger trade deal. This proposal, seen as a significant concession, signals India’s readiness to foster stronger economic ties with Washington while protecting its domestic economy from retaliatory measures. The report further noted that New Delhi hopes this move will encourage the U.S. to reconsider its own tariff plans, especially on Indian exports like textiles, pharmaceuticals, auto parts, and machinery, which form the backbone of India’s foreign trade revenue.
The decision to remove import duties also aligns with recommendations made by a parliamentary committee last week. The committee emphasized that reducing raw material costs is crucial to supporting Indian manufacturers, particularly those in emerging sectors like electric vehicles and advanced electronics. The committee argued that high production costs have been a major roadblock to India's ambitions of becoming a global manufacturing hub, and cutting tariffs on essential inputs would provide a much-needed boost to competitiveness.
Industry leaders across the EV and electronics sectors have largely welcomed the announcement, praising the government’s proactive approach. In the EV market, battery costs remain one of the most significant barriers to mass adoption. By eliminating duties on crucial battery components, the move is expected to drive down production costs, making electric vehicles more affordable for consumers. This could fast-track India’s ambitious goal of achieving 30% electric vehicle penetration by 2030, in line with its commitments to reducing carbon emissions and improving air quality.
Similarly, India’s thriving mobile phone manufacturing sector — which has rapidly expanded in recent years — is expected to benefit significantly from lower costs on key components. With global giants like Apple, Samsung, and Xiaomi expanding their production facilities in India, cheaper imports of parts like display panels, processors, and camera modules could strengthen India’s position as a global smartphone production hub, rivaling countries like China and Vietnam.
However, analysts have warned that while the tariff cuts are a positive step, their long-term effectiveness hinges on how quickly India and the U.S. can finalize a comprehensive trade agreement. A prolonged impasse could still leave Indian exporters vulnerable to higher American tariffs, particularly in industries like apparel, automotive components, and pharmaceuticals — all of which heavily rely on the U.S. market.
Moreover, some economists have raised concerns about whether India’s tariff cuts might inadvertently increase reliance on imported materials, potentially undermining the government’s flagship "Make in India" initiative. To counter this, experts suggest that the tariff reductions should be accompanied by incentives to develop domestic supply chains and promote local production of raw materials.
In the coming weeks, all eyes will be on the ongoing trade negotiations between India and the U.S. Both nations face the challenge of balancing domestic priorities with global trade realities. For now, the government’s swift action to protect key manufacturing sectors — alongside its diplomatic efforts to avert an escalating tariff battle — signals a clear commitment to safeguarding India’s economic stability and ensuring that its industries remain competitive on the global stage. As the April 2 tariff deadline approaches, the success of these measures will likely be a pivotal factor in shaping India’s economic trajectory in the years ahead.
