Nepal's 2026 Budget Zero-Tax EV Battery Policy:
What It Means for Local Manufacturers and Buyers

Nepal's parliament passed the FY 2082/83 budget on May 29–30, 2026. Buried inside the fiscal measures was a provision that directly affects every e-rickshaw operator, Safa Tempo driver, and solar battery buyer in the country: zero customs and excise duty on domestically manufactured deep-cycle lead-acid batteries for electric vehicles.

No Nepali battery manufacturer had published a response to this by the time we wrote this article. That's unusual, because the policy is a direct financial benefit to local producers — and by extension, to the buyers who depend on them.

We are one of those manufacturers. Kulayan Battery Industries has been making deep-cycle lead-acid batteries for e-rickshaws, Safa Tempos, and solar systems at our Khanar-6, Sunsari facility since the early 2000s. This policy was written for the product we make. Here is what we think it actually means.

What the policy does

The zero-tax provision removes the customs and excise duty burden on deep-cycle lead-acid batteries manufactured domestically and used in electric vehicles. This is different from a general battery exemption — it is targeted specifically at locally made, EV-category batteries.

The key distinction is between domestic and imported. Batteries manufactured in Nepal — in facilities like ours in Khanar — qualify. Batteries imported from India or China do not. Nepali manufacturers now have a tax position that imported batteries simply cannot match.

What this means in practice

For e-rickshaw and Safa Tempo operators

E-rickshaw battery replacement is a fixed operating cost that arrives every two to three years. A typical e-rickshaw runs on four 12V batteries; a Safa Tempo on six 6V deep-cycle cells. These replacements represent a significant expense for operators — particularly those running on thin margins in competitive urban routes.

The zero-tax policy takes a direct cost off the table for domestically made batteries. Whether that saving reaches the buyer depends on how each manufacturer and dealer responds — but the layer of cost that previously put locally made batteries at a disadvantage against imports is gone.

For solar battery buyers

Deep-cycle lead-acid batteries are the backbone of Nepal's off-grid and hybrid solar storage market — in homes, schools, telecom towers, and small businesses across the hills and Terai. The same zero-tax principle that applies to EV batteries applies to this category when the batteries are domestically manufactured and meet the specification threshold.

For the local manufacturing sector

Nepal has only a handful of battery manufacturers. Most supply — especially for higher-capacity cells — still comes from India or China. A tax structure that favours local production changes the business case for investing in domestic capacity. Import chains carry their own risks: currency swings, border delays, stock shortfalls when demand spikes. This policy shifts the balance.

What this doesn't change

A tax exemption is not a price guarantee. It is a cost-side input that manufacturers must choose to pass through. Buyers should evaluate batteries on the full picture: manufacturing quality, warranty terms, local service availability, and whether the dealer can actually replace what they sell when something goes wrong.

Imported batteries will still be available, and some will still be cheaper on sticker price even with the duty disadvantage. The question for buyers is total cost of ownership — purchase price, replacement frequency, warranty service access, and downtime cost — not just the upfront number.

Lithium-ion batteries are also not the focus of this policy in its current form. For operators considering the switch from lead-acid to lithium, the calculus is different. Kulayan's lithium-ion programme is in development at the Khanar facility and will launch in 2026 — but that transition is driven by operational requirements, not this particular tax provision.

Nepal's broader EV context

This budget provision does not exist in isolation. Electric vehicles now account for 73% of new passenger car registrations in Nepal. E-rickshaw and Safa Tempo fleets continue to grow in urban centres across the Terai and hills. NEA's 960 MW solar award and the ongoing home solar adoption curve are adding thousands of deep-cycle battery installations every year.

The decision fits a broader pattern in Nepal's economic policy: back domestic production, reduce import reliance, and push the clean transport transition at the same time. Those three goals reinforce each other here.

For a manufacturer that has been making these batteries since 1994, it is — quietly — a vote of confidence in what local industry can do.

Frequently asked questions

What did Nepal's 2026 budget do for EV batteries?

Nepal's FY 2082/83 budget removed customs and excise duty on domestically manufactured deep-cycle lead-acid batteries used in electric vehicles. This makes locally made EV batteries more price-competitive against imported alternatives.

Will the zero-tax policy lower battery prices in Nepal?

It creates the conditions for lower prices by removing a cost layer from domestic manufacturers. How much of that reduction reaches the end buyer depends on each manufacturer and dealer. Kulayan is a direct beneficiary as a domestic manufacturer of deep-cycle lead-acid EV batteries.

Which batteries qualify for the zero-tax benefit?

The policy covers domestically manufactured deep-cycle lead-acid batteries for electric vehicles — the category that includes e-rickshaw batteries, Safa Tempo batteries, and heavy-duty traction batteries. Imported batteries do not qualify for the same exemption.

Does this affect Kulayan batteries specifically?

Yes. Kulayan manufactures deep-cycle lead-acid batteries for e-rickshaws, Safa Tempos, and solar applications at our Khanar-6, Sunsari facility. Our batteries are domestically produced and fall directly within the category this policy targets.