Union Budget 2025-26: Solar Cells and Modules Duty Cut to 20 Percent

In the Union Budget 2025-2026, Finance Minister Nirmala Sitharaman introduced measures aimed at boosting domestic value addition and  clean tech manufacturing, particularly in the solar energy and critical minerals sectors.

The budget proposed a revision of tariffs for solar cells and modules under the tariff heading 8541. The customs duty on solar cells will be reduced from 25 percent to 20 percent, with an additional 7.5 percent under the Agriculture Infrastructure and Development Cess (AIDC) and 2.5 percent under Social Welfare Surcharge (SWS). For solar modules, the customs duty will be lowered from 40 percent to 20 percent, with an additional 20 percent under AIDC and 4 percent under SWS. This reduction is designed to support the government's push for clean tech manufacturing and the growth of the solar industry in India.

The 'National Manufacturing Mission', which will encompass small, medium, and large industries, aims to further the 'Make in India' initiative by providing policy support, roadmaps, and a governance framework. The mission will also include a focus on clean tech manufacturing, encompassing solar PV cells, EV batteries, motors and controllers, electrolysers, wind turbines, high-voltage transmission equipment, and grid-scale batteries, in line with the government's commitment to climate-friendly development.

The Minister announced further support for domestic manufacturing by fully exempting customs duties on critical minerals such as cobalt powder and waste, lithium-ion battery scrap, lead, zinc, and 12 other minerals. This follows the exemptions made in the July 2024 Budget on 25 critical minerals and aims to secure the availability of these essential materials for manufacturing in India. The move is expected to foster job creation, especially for youth, and boost the processing capabilities of Micro, Small, and Medium Enterprises (MSMEs).

Furthermore, to strengthen the lithium-ion battery sector, the Minister proposed to add 35 capital goods for electric vehicle (EV) battery manufacturing and 28 capital goods for mobile phone battery manufacturing to the list of exempted capital goods, thereby supporting the domestic production of lithium-ion batteries for both electric vehicles and mobile phones.