The Indian Li-ion battery market is estimated to reach over US$25 billion by 2031. It’s worth noting that batteries make up about 40-50 percent of the cost of an EV. Considering this major opportunity, India is starting to formulate several incentives, including the PLI scheme.
India’s passion for a green economy is fuelling major growth in the electric vehicle (EV) space. However, there remains a significant untapped opportunity within this ecosystem. With battery manufacturing being the backbone of this industry, it raises a critical question: Why is India still dependent on other countries to manufacture batteries?
Government bodies, industry leaders, and multiple stakeholders of the EV industry have laid emphasis on the need to decrease reliance on imports for manufacturing batteries. The key objective is to establish localised battery production, as currently 70 percent of lithium-ion cell requirements are imported, with the majority sourced from China, a major hub for battery manufacturing.
China has been steadily acquiring lithium and other raw material sources through strategic agreements with Australia and countries in South America and Africa over the last decade while strengthening its manufacturing processes and becoming a monopoly in processing raw materials and other components required for cell production.
The Indian Li-ion battery market is estimated to reach over US$25 billion by 2031. It’s worth noting that batteries make up about 40-50 percent of the cost of an EV. Considering this major opportunity, India is starting to formulate incentives such as the PLI scheme for local cell manufacturing units. However, this scheme doesn’t currently focus on the entire support ecosystem that will feed into cell manufacturing.
While the recent discovery of Li-ion reserves in Kashmir is promising for building a self-sufficient source of raw material, the quantum of lithium that will be extractable is still uncertain while numerous other mineral resources and components are required to manufacture cells including electrolytes, binders and additives, solvents, separators, etc.
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There are about 5-10 different components that make up the battery manufacturing ecosystem. These include the raw materials and their secondary processing, creation of CAM (cathode and anode materials), electrolyte processing, and separator manufacturing among others to form a complete ecosystem. Each component can create a separate industry of its own, supporting cell manufacturers to have a completely localised supply chain.
Establishing self-sufficiency within the ecosystem is crucial for EV companies to maintain a smooth supply chain and avoid dependence on external factors – such as pandemics, global supply chain shortages, and geopolitical conflicts. In addition, a strong relationship between the industry and universities for research-based insights will lead to the development of more advanced and efficient cell chemistries that can be developed keeping in mind the ease of local manufacturing in India.
A ‘Made-in-India’ battery initiative will generate more employment opportunities, enhance our technological expertise, and foster a robust EV economy. Multiple tenders and contracts awarded to companies for local cell production are paving the way towards a self-reliant nation. Furthering this step, a well-planned holistic trajectory will empower India to make significant strides towards an electric future.
—The author, Gautham Maheswaran, is Co-Founder and CTO at RACEnergy. The views expressed are personal
(Edited by : C H Unnikrishnan)
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