India’s battery manufacturing sector is all set for a rapid expansion, driven by the burgeoning demand for electric vehicles supported by the strong governmental push for electrification, and substantial investments in scaling up the nation’s Battery Energy Storage System (BESS) ecosystem.
Additionally, the government’s commitment to reduce greenhouse gas emissions with the help of renewable energy, as a part of its efforts to reduce hydrocarbon imports, provides further impetus to battery makers to ramp up their output to meet the rising demand.
The battery manufacturing ecosystem in India is also expected to get a further push from the projected investments of ₹5 lakh crore to increase India’s BESS capacity to 66 gigawatt hours by 2032, out of which batteries alone account for nearly 80% of the overall cost.
Based on prevailing battery costs, which account for the majority of BESS implementation costs, the storage cost using BESS is estimated to have come down from around ₹10 per unit in 2022, to nearly ₹6 per unit 2025 as the recent bids.
A rapid expansion of domestic battery manufacturing capacity along with the emergence of strong component supply chain ecosystem in the country will help in reducing dependence from imports from China, which dominates the global lithium-ion battery production holding nearly 70% of the global capacity.
This shift will not only strengthen India’s energy independence but also further drive down Battery Energy Storage System (BESS) tariffs, making energy storage more affordable and sustainable.
India presents a unique advantage for battery manufacturers, driven by surging demand from two powerful forces—the rapid adoption of electric vehicles and a strong push to expand BESS capacity. This combination creates an unparalleled opportunity for large-scale local production, positioning India as a global hub for battery manufacturing.
The demand for made-in-India battery cells is also fuelled by the ongoing rapid expansion of renewable energy, which needs massive storage capacities. At the same time, the global shift away from China in battery production also provides an opportunity to India to position itself as a prime destination for global battery manufacturing investments.
The rapid growth of BESS projects is further pushing investments into domestic raw material processing, cell manufacturing, and component production. Companies are now investing in local supply chains for electrodes, electrolytes, and battery management systems (BMS) to reduce import reliance. Battery recycling initiatives are expected to improve material security and support a circular economy for lithium and other key minerals.
Industry experts are maintaining that a key factor in the projected exponential growth of the sector will be the indigenisation and a cradle-to-grave approach to the battery manufacturing ecosystem, with the government’s PLI schemes serving as a vital stepping stone in this journey.
The battery production ecosystem in the country is also expected to get a support from the government’s plan to roll out a ₹18,100-crore production-linked incentive (PLI) scheme to set up advanced chemistry cell (ACC) manufacturing facilities in India with a target of achieving 50 GWh manufacturing capacity.
The government has already signed the ‘Programme Agreement’ to implement the PLI-ACC scheme for 40 GWh manufacturing capacity and has already initiated the bidding process for the balance of the remaining 10 GWh capacity for Grid Scale Stationary Storage applications under the scheme.
The rapid growth of BESS projects is driving a surge in investments across domestic raw material processing, cell manufacturing, and component production, thereby strengthening local supply chains for electrodes, electrolytes, and battery management systems (BMS).
The battery manufacturing landscape is set for a seismic shift, with a number of companies announcing an additional 246 GWh of capacity through 2035. Looking at the trend, it can be said that India’s battery manufacturing capacity is likely to be in the range of 100-150 GWh by the end of this decade.
In future, battery recycling initiatives will play a pivotal role in enhancing material security, fostering a circular economy for lithium and other critical minerals, and unlocking new opportunities for industries like battery recycling.
Several Indian companies, such as Amara Raja, Ola Electric, Exide Industries, Reliance Industries, and GODI India, have announced their plans to set up giga-factories in the country to manufacture lithium-ion cells.
The expansion of Battery Energy Storage Systems in India is set to be a game-changer for the country’s energy and manufacturing sectors. As the demand for reliable and efficient storage solutions rises, domestic battery production will play a pivotal role in ensuring energy security, boosting economic growth and positioning India as a global hub for battery manufacturing.
By Rohin Agarwal – Vice President, Avener Capital
