India’s Current Position: Large Market, Thin Technological Base
India’s battery demand is rising rapidly. EV penetration, renewable capacity expansion, and grid balancing needs are expected to push annual battery demand beyond 150–200 GWh by the early 2030s. Yet today, over 85–90% of lithium-ion cells used in India are imported, predominantly from China, with smaller volumes from South Korea and Japan.
Domestic firms largely operate as system integrators. Battery packs assembled in India typically rely on imported cells, imported cathode/anode materials, and foreign process know-how. This dependence persists even among India’s largest industrial groups.
The government’s Advanced Chemistry Cell (ACC) Production Linked Incentive (PLI) scheme — with incentives of up to ₹181 billion — was designed to alter this structure. Incentives were tied to achieving minimum gigawatt-scale capacity and raising local value addition from 25% within two years to 50% within five years. In theory, this would push firms upstream into materials and cell manufacturing.
In practice, however, the scheme cannot manufacture technology on its own. Most Indian bidders have had to seek foreign technology partners to bridge gaps in cell chemistry, process engineering, and yield optimisation — precisely where geopolitical and regulatory frictions are most acute.
Incentives Without Process Mastery
India’s ACC Production Linked Incentive scheme is structured around capacity creation and localisation milestones, but it largely ignores the hardest part of battery manufacturing: process learning. Yield improvement, defect reduction, and cycle-life optimisation — the variables that determine commercial success — are not directly incentivised.
Global battery leaders spent 5–10 years running loss-making lines while climbing steep learning curves. During this phase, yields often start below 70% and improve gradually toward 90–95%, dramatically reducing costs. India’s incentive framework assumes faster convergence, without explicit support for prolonged learning losses.
The risk is predictable: factories may meet formal localisation targets while remaining commercially fragile, requiring repeated extensions, protection, or bailouts. Without aligning incentives to learning outcomes rather than headline capacity, industrial policy risks building factories without building competitiveness.
Reliance’s Pause in Context: Technology, Not Capital, as the Constraint
Reliance’s battery ambitions were anchored in its broader new-energy strategy spanning solar modules, green hydrogen, and storage. The cell manufacturing component depended on accessing proven lithium-ion technologies — an area where Chinese firms remain the undisputed leaders by scale, cost, and maturity.
The collapse of those talks reflects a recurring constraint. Battery cell manufacturing is not a plug-and-play activity. It requires proprietary process recipes, tightly controlled environmental conditions, multi-year learning curves, and deep integration between materials science and factory operations. Chinese firms have little incentive to transfer this knowledge wholesale, particularly amid heightened Indian scrutiny of Chinese technology and investment since 2020.
Without that transfer, Indian manufacturers face a stark choice: accept slower, costlier indigenous development; rely on second-tier technologies with weaker cost competitiveness; or delay scale manufacturing altogether.
What Indian Players Are Doing Today — And Where the Gaps Remain
Several Indian firms are active across different segments of the battery ecosystem, but mostly short of full cell-technology control.
- Tata Group has moved aggressively on the downstream side, with battery pack assembly and integration for Tata Motors’ EV portfolio. Through Tata Chemicals, it is also investing in cell manufacturing in Gujarat, with plans that combine imported technology and domestic assembly. However, key inputs — cathodes, anodes, and lithium compounds — are still expected to be imported in the near term.
- Ola Electric has announced a large gigafactory project in Tamil Nadu, aiming for eventual scale of over 100 GWh. Ola has invested in in-house R&D teams and pilot lines, but its initial production phases are expected to rely on licensed or adapted foreign chemistries, with localisation deepening only gradually.
- Exide Industries and Amara Raja are transitioning from lead-acid dominance toward lithium-ion. Both have set up or announced lithium-ion assembly and limited cell manufacturing plans, often in partnership with foreign firms. Their current lithium supply chains remain import-dependent, particularly for cathode materials and electrolyte formulations.
On the R&D front, India does have pockets of capability. Public institutions and start-ups are working on alternative chemistries such as sodium-ion, zinc-air, and solid-state batteries. While promising for long-term diversification, these technologies are not yet commercially competitive with lithium-ion at scale and will take years to mature.
Upstream, India has made tentative moves to secure mineral supply through overseas acquisitions and partnerships in Australia, Latin America, and Africa. Yet these efforts are early-stage, and even successful mining does not automatically translate into control unless refining and chemical processing capacity is built alongside.
Cost Curves That Punish Late Entrants
Global battery cost leadership is not incremental; it is scale-driven. Industry data shows that lithium-ion cell costs fall sharply only after plants cross 15–20 GWh of annual capacity, with utilisation rates above 80–85%. At this scale, leaders achieve cell costs below $90 per kWh, a threshold that enables EV affordability and grid-scale viability.
By contrast, plants operating below 5–10 GWh face structurally higher costs — often $120–140 per kWh — due to under-utilised equipment, higher per-unit depreciation, weaker supplier bargaining power, and lower learning-by-doing gains. Many Indian projects begin precisely in this sub-scale range, either as pilots or phased rollouts, making them cost-uncompetitive from inception, even before localisation challenges are factored in.
This creates a vicious cycle. High costs suppress demand, low demand keeps utilisation weak, and weak utilisation prevents cost reductions. Breaking this loop requires sustained losses in early years — something only a handful of global incumbents have absorbed over long time horizons.
Battery Recycling: A Narrow Midstream Wedge — With Hard Limits
Battery recycling is one of the few midstream entry points available to India not because it is easy, but because it has shorter learning curves and weaker incumbent moats than greenfield cell chemistry. It cannot deliver self-sufficiency, but it can partially rebalance material dependence by converting domestic waste into controlled supply.
Globally, recycled materials are projected to supply 10–15% of lithium demand and 20–25% of nickel and cobalt demand by 2035, even in advanced EV markets. This sets a hard ceiling: recycling can reduce exposure, not replace mining and refining. For India, the constraint is sharper because volume timing lags. EV penetration remains concentrated in two- and three-wheelers, with smaller packs and longer replacement cycles, meaning meaningful end-of-life lithium-ion volumes are unlikely before the early-to-mid 2030s.
Process economics further limit near-term impact. Commercial hydrometallurgical routes recover 80–90% of nickel and cobalt, but only 50–70% of lithium, with costs sensitive to energy prices, reagent imports, and collection efficiency. Below minimum feedstock thresholds — typically 20,000–30,000 tonnes of black mass per year per plant — unit economics deteriorate rapidly, making sub-scale facilities structurally fragile.
India’s current capacity sits well below this bar. Most domestic players operate pilot or demonstration-scale plants, processing only a few thousand tonnes annually. Collection logistics remain fragmented, enforcement of extended producer responsibility (EPR) is uneven, and recycled lithium salts continue to price off imported benchmarks.
Where recycling offers a genuine advantage is learning velocity. Unlike cell manufacturing, where yield optimisation requires years of high-volume iteration, recycling processes — leaching efficiency, impurity removal, solvent recovery — can improve at smaller scales. This allows earlier capability build-up, even if commercial impact lags.
The policy implication is narrow but clear. Recycling should be treated as a materials-security instrument, not an industrial shortcut. Its role is to marginally reduce supply vulnerability, build chemical-processing expertise, and establish domestic end-of-life standards. Expecting it to substitute for upstream refining or cell-level IP would overstate its reach.
Used realistically, recycling can close part of India’s materials loop within a decade. Used rhetorically, it risks becoming another segment where capacity exists without scale, economics, or strategic leverage.
The Recurring Pattern: Assembly First, Technology Later — If at All
The Reliance episode mirrors challenges seen earlier in solar wafers, semiconductors, and electronics manufacturing. India has been successful at scaling assembly and deployment, but struggles to move upstream into technology-intensive segments where incumbents enjoy entrenched advantages and learning curves measured in decades.
In batteries, the challenge is magnified by rapid technological churn and brutal cost competition. Global leaders are already moving toward next-generation chemistries and manufacturing automation, raising the bar for late entrants.
Speed Versus Sovereignty in the Energy Transition
India faces a fundamental trade-off that policy has yet to confront openly. Rapid electrification and renewable deployment favour cheap, imported battery cells that accelerate adoption. Strategic autonomy, by contrast, requires slower deployment, higher early costs, and years of domestic capability-building.
Trying to maximise both simultaneously creates friction: domestic manufacturers struggle to compete, projects stall, and policy oscillates between protection and pragmatism. Reliance’s pause is a symptom of this unresolved tension.
Acknowledging the trade-off does not mean choosing one extreme. It means sequencing policy honestly — deciding where imports are acceptable, where domestic capacity is strategically essential, and where patient capital must absorb losses. Without that clarity, India risks remaining permanently dependent even as it builds ever-larger EV and storage markets.
Why This Matters
Battery cells sit at the heart of India’s clean-energy transition. Without control over cell technology and materials, India remains exposed to price volatility, supply disruptions, and geopolitical leverage, even as EV adoption and renewable energy capacity accelerate.
Reliance’s pause should therefore be seen not as a setback for one company, but as a strategic signal. Incentives can attract factories and capital, but technology, materials, and process control determine sovereignty. Unless India can climb upstream — into refining, materials science, and cell-level intellectual property — it risks remaining a large battery market rather than a battery power.
The question is no longer whether India wants battery self-reliance, but whether it is prepared for the long timelines, early losses, and coordinated state-industry effort required to achieve it.
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