Over 150 GWh of lithium-ion (Li-ion) battery cell capacity is committed to be operational in India by 2030, with investments exceeding Rs 750 billion for these committed capacities, according to a recent report by ICRA.

The Indian electric vehicle (EV) industry is witnessing rapid growth, with EV penetration expected to increase exponentially over the next five years, driven by government support, enhanced awareness, and increasing product launches. As the most critical and costly component of an EV, accounting for 35-40% of total cost, battery cell manufacturing has garnered significant attention, as developing a domestic cell manufacturing ecosystem is critical for reducing dependence on imports.

The global Li-ion battery market is currently dominated by China, which leads in raw material processing and manufacturing capacity. Battery prices have been declining, with a 20% YoY drop in CY2024, due to increased supply. Over the medium term, global Li-ion battery supply is expected to outpace demand, which could impact pricing trends in India.

At present, India relies on imports for Li-ion battery cells, with local capabilities primarily limited to battery pack assembly. By FY2025, demand for Li-ion battery cells in India is expected to reach 11-13 GWh, and is projected to grow significantly to 60-65 GWh by FY2030. Apart from EVs, the demand for Li-ion batteries is also expected to rise for stationary applications.

Despite the promising outlook, several challenges remain in establishing a robust battery cell manufacturing industry in India. While India's push for localised battery production is gaining momentum, the industry remains in the high-risk category due to uncertainties related to investment returns, technology reliability, and raw material sourcing. There is no significant development of battery recycling infrastructure yet. Despite these, the country is steadily moving towards reducing its import dependence and building a self-reliant EV battery ecosystem with strong policy support and growing private sector investments.