Advanced Cell Chemistry Battery - COE Chakra

Advanced Cell Chemistry/Battery Sectoral Insights

India is entering a decisive phase in its energy transition, driven by the parallel rise of electric mobility and large-scale energy storage. At the centre of this shift is the urgent need to develop domestic capacity for advanced cell chemistry (ACC) battery manufacturing. The country’s current dependence on imported lithium-ion cells exposes it to significant cost, security, and supply chain risks, particularly as demand surges in both transportation and grid storage segments.

Recognizing this strategic vulnerability, the Government of India launched a Production Linked Incentive scheme with an allocation of INR 18,100 crore. The program aims to support the establishment of 50 GWh of ACC manufacturing capacity and is structured to reward companies that meet specific performance and localization milestones. Three firms have been selected under this initiative: Reliance New Energy, Ola Electric, and Rajesh Exports, with each committing to create greenfield cell production facilities capable of scaling to global benchmarks.

Establishing a competitive ACC manufacturing base in India requires substantial capital investment and operational readiness. A 10 GWh facility is estimated to cost between INR 4,500 and 6,000 crores. The most capital-intensive elements include electrode preparation systems, precision cell assembly lines, formation and testing equipment, and specialized infrastructure for power, cleanroom conditions, and environmental control. These systems are not currently manufactured in India, making cell producers entirely dependent on foreign suppliers for plant setup and commissioning.

Beyond capital investment, ongoing operating costs are dominated by raw materials. Battery-grade cathode materials, anode precursors, electrolytes, and separators account for roughly 70% of the cost structure. India lacks upstream production in each of these areas, and over 60% of material inputs are currently sourced from Chinese manufacturers. Without localized access to these critical inputs or secure supply agreements through international partnerships, India’s battery producers will remain exposed to global pricing and logistics volatility.

Despite these challenges, India’s long-term demand outlook for batteries is exceptionally strong. Total cumulative demand is expected to reach ~180 GWh by 2030. Growth will be led by electric two and three-wheelers, buses, and passenger vehicles, all of which are supported by improving cost economics and an increasingly favourable policy environment. At the same time, energy storage for renewable integration and industrial backup is projected to accelerate, driven by the rising share of solar and wind in the generation mix and the need for grid flexibility.

Battery energy storage systems (BESS) are foundational to modern power infrastructure, enabling grid stability, renewable energy integration, and flexible energy management across utility, commercial, and residential sectors. BESS offers time-shifting, peak shaving, backup, and frequency regulation services, making it a key enabler for the clean energy transition in both developed and emerging markets. Cumulative BESS tenders in India reached ~ 83 GWh as of 2025, with nearly 60 GWh already awarded, signaling the country's readiness for large-scale integration of storage infrastructure which is expected to reach 40 GWh+ of annual installations by 2030.

However, scale alone is insufficient. Global competitiveness requires depth across the entire battery value chain. India currently lacks access to critical minerals such as lithium, cobalt, and nickel, as well as the capability to manufacture high-value components such as cathode active materials and separators. Bridging these gaps will require a combination of foreign direct investment, strategic mineral sourcing agreements, and industrial partnerships focused on backward integration.

Battery recycling has emerged as a vital enabler of not only sustainability, resource efficiency, but also supply chain resilience in the energy storage ecosystem, for countries like India lacking access to critical minerals. Three primary end-of-life pathways exist for batteries: reuse, remanufacturing, and recycling. Among these, recycling is expected to dominate with 95% of end-of-life lithium-ion batteries projected to be recycled by 2030, driven by increasing regulation and cost dynamics.

A forward-looking national strategy must go beyond financial incentives and address structural enablers such as land availability, utility access, skilled labour, and technology transfer. Public/ private R&D efforts should focus on cost-efficient chemistries, recycling technologies, and adaptive manufacturing systems tailored to Indian conditions. Regulatory clarity and harmonization with global safety and quality standards will also be essential for long-term scalability.

India’s opportunity to emerge as a global hub for battery manufacturing is real and significant. Success will depend on fast and coordinated execution across public and private stakeholders. The foundation has been laid with strong policy intent and robust market demand. The next phase must prioritize material security, supply chain resilience, and full spectrum localization to unlock sustained industrial and strategic advantage in the global energy economy.

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• Sectoral Insights Advanced Cell Chemistry Battery May 26  (1.5 MB)