Union Budget 2026: Tax and Duty Exemptions to Boost Clean Energy and Manufacturing

Budget 2026 Targets Clean Energy and Domestic Manufacturing

Finance Minister Nirmala Sitharaman has announced a set of focused tax and customs duty exemptions in the Union Budget 2026, aimed at accelerating India’s clean energy transition, strengthening manufacturing ecosystems, and promoting balanced regional development. The measures seek to reduce input costs for strategic sectors while reinforcing the government’s push for self-reliance and industrial competitiveness.

Customs Duty Relief for Advanced Battery Production

One of the key announcements is the extension of basic customs duty exemption on capital goods used in the manufacture of lithium-ion cells for battery storage. This step is expected to lower the cost of setting up and expanding battery cell manufacturing units in India. By easing access to specialised machinery, the policy aims to support electric mobility, renewable energy storage, and grid stabilisation while encouraging domestic value addition in advanced technologies.

Support for Solar Glass and Critical Minerals

The Budget also proposes a basic customs duty exemption on the import of sodium antimony used in the manufacture of solar glass. In parallel, capital goods required for processing critical minerals within India will be exempted from customs duty. Together, these measures are designed to strengthen domestic supply chains in renewable energy and reduce dependence on imported intermediate goods in strategically important sectors.

Excise Duty Relief for Biogas-Blended CNG

To promote cleaner transport fuels, the Finance Minister announced that the entire value of biogas will be excluded when calculating central excise duty on biogas-blended compressed natural gas (CNG). This incentive is expected to improve the commercial viability of blending biogas with natural gas, supporting waste-to-energy initiatives and reducing emissions from the transport sector.

Important Facts for Exams

• Lithium-ion batteries are central to electric vehicles and renewable energy storage.

• Biogas-blended CNG reduces carbon emissions compared to conventional fuels.

• Critical minerals are vital for batteries, electronics, and clean energy systems.

• Customs duty exemptions are policy tools to promote domestic manufacturing.

Regional Development and Infrastructure Push

Beyond clean energy, the Budget outlines plans for an integrated East Coast Industrial Corridor with a major node at Durgapur. It also proposes the development of five tourism destinations across five Poorvodaya states, deployment of 4,000 electric buses, and focused development of Buddhist heritage sites in the northeastern region. At the same time, the government signalled a move towards rationalising customs duty exemptions on goods already produced domestically or with negligible import volumes.

Together, these measures reflect a calibrated approach in Union Budget 2026—using fiscal incentives to promote clean energy, deepen manufacturing capabilities, and advance regionally balanced growth.