India's Push for Advanced Battery Technologies: Trends & Impacts

1. India's Push for Advanced Battery Technologies: Trends and Impacts India is transitioning its energy framework by growing its adoption of renewables, promoting electric mobility, and addressing fossil fuel dependence. Advanced battery technologies are key to this transformation, driving progress toward India’s climate goals and reshaping its energy and transportation sectors. Lithium-ion batteries (LiBs) are the leading technology among advanced batteries. LiBs come in several variants; however, most batteries deployed in India are lithium nickel manganese cobalt (LNMC), lithium iron phosphate (LFP), and lithium manganese oxide compositions. According to the India Energy Storage Alliance (IESA), the cumulative demand for LiBs across the EV, stationary energy storage, and consumer electronics sectors is projected to reach approximately 600 GWh by 2030. The Government of India has actively supported this transition through various initiatives. Programs like the National Electric Mobility Mission Plan (NEMMP) and the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme have introduced incentives to accelerate EV adoption. The Production-Linked Incentive (PLI) scheme for advanced chemistry cell (ACC) battery manufacturing aims to create a strong domestic battery supply chain, minimizing dependence on imports. In 2021, the PLI scheme earmarked INR 18,100 crore to foster the growth of a domestic battery manufacturing ecosystem. Further, a PLI scheme to support niche battery chemistries that reserve 5 GWh capacity to advance cutting-edge technologies such as sodium-ion, solid-state, and aluminum-air batteries has been launched. The initiative encourages innovation by offering R&D incentives, fostering sustainable manufacturing, and reducing reliance on imports. The GoI’s national program on the ACC PLI program is a good starting point for developing the domestic battery manufacturing ecosystem. With the recent progress in the ACC PLI program, three companies have signed the PLI agreement for a capacity of 40 GWh (original 50 GWh) and are all set to build their plants. The Indian ACC battery manufacturing industry is gearing up significantly to cater to the domestic and global demand for ACC batteries. IESA estimates that around 140 GWh of ACC manufacturing capacity is expected by 2030, of which around 120 GWh can be operational by 2030 Significant progress has been made in developing the ACC and supply chain component industry (anode, cathode, electrolyte, separator, etc.) to support the objective of ACC manufacturing in India. However, the ACC manufacturing sector faces significant challenges, particularly in raw material availability, machinery, skilled manpower, and policy support. Key components like cathodes, anodes, electrolytes, and separators are predominantly imported due to domestic unavailability, driving up costs. Machinery essential for ACC production also relies on imports, further inflating capital costs. The visa approval process for foreign experts adds complexity, with high fees, strict financial criteria, and lengthy timelines, complicating plant commissioning. Additionally, the industry lacks skilled manpower and technical expertise, necessitating global collaborations for knowledge transfer. Policy and regulatory gaps, including insufficient incentives for component manufacturing, hinder large-scale investments and the development of a robust domestic supply chain. Addressing these issues is crucial to realizing India’s ACC manufacturing potential. India's ambitious EV deployment targets and creation of a sustainable ACC battery manufacturing ecosystem demand a comprehensive and strategic approach. While the ACC PLI scheme lays a solid groundwork, addressing challenges such as raw material dependency, high capital costs, and skill

2. shortages is critical. Key measures include import duty exemptions for essential raw materials and machinery, capital subsidies for land, plants, and equipment, and streamlined visa processes to attract global expertise. Collaborations with advanced nations for R&D and establishing cutting-edge research centers will drive innovation and technological advancement. Introducing antidumping duties on imports and lowering GST rates on domestically produced Li-ion cells will enhance the competitiveness of local manufacturers. Integrating renewable energy, offering subsidized energy tariffs, and expediting environmental clearances are essential to ensure sustainability. Comprehensive skill development initiatives will build a capable workforce, enabling India to reduce import reliance and position itself as a global leader in ACC battery manufacturing. In ACC battery manufacturing, significant value addition occurs at the midstream level of the value chain, which requires substantial capital investment for manufacturing plants. To support this, the government should introduce dedicated incentives through a PLI program to encourage large-scale adoption of midstream ACC battery material manufacturing during its initial phase. This initiative is expected to generate substantial economic benefits, including an estimated cumulative foreign exchange savings of INR 70,000 crore, tax revenue of INR 25,000 crore, and ~100,000 jobs by 2030. With a proposed PLI outlay of INR 9,250 crore over 2027-2030, investments in ACC components manufacturing could reach INR 70,000 to 75,000 crore, boosting India’s GDP and attracting foreign investments. Furthermore, developing a domestic manufacturing ecosystem will foster a circular economy, enabling the supply of recycled materials for future ACC battery production.