India’s battery manufacturing sector is undergoing rapid transformation, fueled by government incentives, private sector investments, and increasing demand for electric vehicles (EVs) and renewable energy storage. The Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) battery storage has been a key driver, attracting major players like Reliance Industries, Tata Group, and international firms to establish gigafactories and supply chains. While the sector shows promise, challenges such as infrastructure gaps, raw material dependencies, and policy execution hurdles must be addressed to realize India’s potential as a global battery export hub.
The PLI scheme for ACC battery storage, with an outlay of INR 18,100 crore, aims to achieve 50 GWh of domestic manufacturing capacity. Reliance New Energy Solar’s acquisition of Faradion, a UK-based sodium-ion battery firm, and its plans to build an integrated gigafactory highlight aggressive moves to secure technology and scale production. Tata Group, through its subsidiary Agratas, is investing over $1.6 billion in a lithium-ion cell manufacturing plant in Gujarat, targeting both domestic and international markets. International players like South Korea’s LG Chem and China’s BYD are also exploring partnerships, though geopolitical tensions and import restrictions on Chinese equipment add complexity.
Despite these investments, infrastructure gaps pose significant challenges. India lacks a robust ecosystem for battery-grade raw materials, relying heavily on imports for lithium, cobalt, and nickel. Over 70% of lithium-ion cells are imported, primarily from China, exposing the sector to supply chain vulnerabilities. Domestic mining initiatives, such as the discovery of lithium reserves in Jammu and Kashmir, are in early stages and will take years to commercialize. Additionally, inconsistent power supply, inadequate logistics networks, and limited dry room facilities for moisture-sensitive manufacturing processes hinder large-scale production.
Policy support extends beyond the PLI scheme. The Faster Adoption and Manufacturing of Electric Vehicles (FAME II) policy indirectly boosts battery demand by subsidizing EVs. The National Programme on Advanced Chemistry Cell Battery Storage seeks to reduce import dependence by promoting R&D and indigenous production. State-level incentives, such as Gujarat and Maharashtra’s subsidies for gigafactories, further attract investments. However, overlapping regulations, delays in environmental clearances, and unclear recycling policies create operational uncertainties.
India’s potential as a battery export hub hinges on cost competitiveness and strategic positioning. Labor costs are 30-40% lower than in Western markets, and the PLI scheme reduces capital expenditure burdens. The country’s free trade agreements with ASEAN and Europe provide tariff advantages for exports. However, achieving economies of scale is critical. Current production costs for lithium-ion cells in India are approximately $110-$120 per kWh, higher than China’s $90-$100 per kWh, due to smaller plant sizes and supply chain inefficiencies. Scaling up to gigafactory levels could narrow this gap.
The focus on alternative battery chemistries may also enhance export prospects. Reliance’s sodium-ion technology and Tata’s exploration of lithium iron phosphate (LFP) cells cater to global demand for non-cobalt-based batteries, which are cheaper and less geopolitically sensitive. India’s expertise in battery pack assembly, coupled with lower labor costs, positions it as a viable alternative to China for global automakers seeking diversified supply chains.
Recycling and sustainability present additional opportunities. With EV adoption rising, end-of-life battery waste is projected to reach 3 million metric tons by 2030. Companies like Attero Recycling and Tata Chemicals are investing in hydrometallurgical processes to recover lithium, cobalt, and nickel. A structured recycling framework, aligned with extended producer responsibility (EPR) rules, could reduce raw material imports and align with global ESG standards.
Key challenges remain in skilled workforce availability and technology transfer. Battery manufacturing requires specialized expertise in electrochemistry, automation, and quality control. While institutions like IITs and the Indian Institute of Science are launching battery technology programs, industry-academia collaboration must accelerate to bridge the talent gap. Technology partnerships with firms from Japan, Germany, and the U.S. are essential to access advanced manufacturing know-how, given restrictions on Chinese collaborations.
In summary, India’s battery manufacturing sector is poised for growth, driven by strategic investments and policy tailwinds. Addressing infrastructure bottlenecks, securing raw material supply chains, and streamlining regulations will be critical to achieving scale and global competitiveness. If these challenges are mitigated, India could emerge as a significant player in the global battery market, catering to both domestic demand and export opportunities. The next five years will be pivotal in determining whether the sector can transition from promise to reality.