With electric vehicle adoption accelerating across the country, Prime Minister Narendra Modi on Tuesday highlighted the need to expand battery production and storage capacity within the energy sector.
“India is rapidly advancing in electric mobility. To meet this demand we must enhance battery production and storage capacity,” Modi said while addressing the India Energy Storage Week event.
Electric vehicle adoption in India is at an early stage and the growth is mainly driven by two-wheelers and three-wheelers. In 2024, India saw the sales of electric vehicle rise around 27% on year to around 1.95 million units.
Currently, electric vehicles sold in India are powered largely by imported batteries from China, Japan, and South Korea.
Localization of cell manufacturing is something that is being looked at keenly as made-in-India lithium-ion batteries hold potential to drive the adoption of electric vehicles, besides making the country less import-dependent.
However, the biggest challenge for lithium-ion battery manufacturing in India is the availability of raw materials. India lacks significant reserves of minerals such as lithium, cobalt, nickel, and graphite, forcing battery makers to depend on imported raw materials.
India’s lithium-ion battery industry heavily depends on imports, with China and Hong Kong being the primary suppliers.
“To support green energy, even in this year’s budget the government has made several announcements. The government has exempted numerous components used in the EVs and mobile phones batteries from the Basic Customs Duty,” Modi noted.
In the Union Budget unveiled recently, the government has fully exempted BCD on 35 additional capital goods used in their manufacturing for batteries while exempting scrap of lithium-ion batteries and scrap of critical minerals cobalt and copper.
The government has recently launched the National Critical Minerals Mission with a total outlay of Rs 34,300 crore for the initial six years with an aim to reduce import dependency on critical minerals and boost exploration.
The scheme aims to increase exploration and develop technologies for processing and recycling, and reduce the import dependence of 24 identified critical minerals including lithium, cobalt and nickel.
A report by NITI Aayog and the Rocky Mountain Institute has said that India’s annual battery market could rise to $15 billion by 2030 from the current $1 billion, with almost $12 billion coming from cells and the rest from pack assembly and integration in the accelerated scenario.
The battery demand in India is expected to rise to 260 GWh over the same period. To meet this scale of demand, India will require five gigafactories in 2025 and 26 gigafactories by 2030.
The government has rolled out production-linked incentive schemes for advanced chemistry cells to boost domestic manufacturing with a total outlay of Rs 18,100 crore.
Several new entrants such as Ola Electric, Reliance Industries, Tata Group, JSW Group, and GODI India, are establishing their facilities for large-scale lithium-ion battery manufacturing while traditional lead acid battery manufacturers Exide Energy and Amara Raja are also setting up their gigafactories.