Is India’s Ambitious Battery Manufacturing Plans Completely Foolproof?

The transition to electric vehicles in India might bank a lot on lithium-ion batteries, but a recent analysis by the Investment Information and Credit Rating Agency (ICRA) reveals substantial challenges ahead. Despite companies pledging investments exceeding ₹75,000 crore and government support through a ₹18,100 crore Production Linked Incentive (PLI) scheme, the path to self-sufficiency remains fraught with obstacles.

While several Original Equipment Manufacturers (OEM) announced plans for more than 150 GWh of battery capacity by 2030, yet most projects remain in conceptual or early construction phases. Major companies like Reliance New Energy and Ola Electric have committed to establishing 20 GWh facilities in Gujarat and Tamil Nadu respectively, while ACME Cleantech received approval for 10 GWh under the PLI scheme.

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Chinese dominance across the battery supply chain presents a fundamental challenge. Currently, India imports most battery cells – which constitute 70-75 per cent of pack costs – while domestic manufacturing is largely limited to low-value assembly operations. Plus, global oversupply poses another significant threat. Battery pack prices dropped by 20 per cent in 2024 due to manufacturing capacity far exceeding demand. This market imbalance makes it increasingly difficult for nascent Indian producers to compete on cost.

Moreover, unlike global trends that favour Nickel-Manganese-Cobalt chemistry, Indian manufacturers are gravitating towards Lithium-Ferrous-Phosphate batteries. The latter offers lower costs, longer life cycles and better performance in hot, humid environments like ours. However, this divergence carries its own risks if global standards evolve differently.

Additionally, India also lacks domestic sources of critical minerals like lithium, cobalt and nickel. Manufacturing equipment must be imported primarily from China, Germany and South Korea. The country also faces shortages of specialised talent and insufficient testing infrastructure.

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While ICRA projects India's EV battery demand will grow from the current 11-13 GWh to 60-65 GWh by fiscal year 2030, this represents less than half the planned capacity, suggesting potential underutilisation. Manufacturers will likely need to pursue export markets or alternative applications such as energy storage.

The pace of electric vehicle adoption continues to remain slower than anticipated due to high costs, limited charging infrastructure and range anxiety. Some manufacturers are pivoting towards hybrid vehicles as a transitional solution, potentially delaying battery demand growth.

Nevertheless, 2025 could mark a turning point with numerous EV launches scheduled across segments. For India to succeed in establishing a robust domestic battery industry, it must develop an integrated ecosystem addressing technology, supply chains and skills development—critical factors for powering its clean mobility ambitions.