Indian Battery Makers Face Up to 61% Cost Gap vs Imports

Indian battery component manufacturers are facing a significant cost disadvantage compared with overseas suppliers, with domestic production costs estimated to be between 18% and 61% higher than imported alternatives. The findings highlight the challenges facing India’s efforts to build a competitive battery manufacturing ecosystem and reduce dependence on imported components.

A report by the Netzero Energy Transition Alliance (NETRA), prepared in collaboration with ARCI, CSIR-NCL, IIT Madras and Deloitte, found that Indian manufacturers face higher costs across key battery materials, including cathodes, anodes, electrolytes, separators and copper foil.

Released earlier this week, the study was launched by the Ministry of Heavy Industries and draws on cost data from more than 20 Indian companies. Its findings come as the government considers a dedicated support scheme for domestic battery component manufacturers.

China’s Dominance Creates a Challenge for Indian Manufacturers

The report, titled Accelerating India’s ACC Component Manufacturing Ecosystem, highlights China’s near-total dominance in the global supply of battery components. This established manufacturing base creates a difficult competitive environment for Indian companies that are still developing production capacity and improving manufacturing efficiency.

According to the study, Indian manufacturers producing cathode and anode materials, electrolytes, separators and copper foil face costs that are substantially higher than those of imported equivalents. The scale of the disadvantage varies across components, suggesting that different parts of the domestic supply chain require different forms of support.

Debi Prasad Dash, Co-Founder and Executive Director of NETRA, said the report’s cost data came from Indian companies that are building or planning battery component manufacturing facilities. He explained that the reasons behind the cost gap differ from one component to another.

Battery Components Account for 76% of Cell Manufacturing Costs

Battery cell components account for approximately 76% of total cell manufacturing costs, making the availability and pricing of these materials particularly important for India’s battery industry.

Higher domestic component costs can affect the competitiveness of Indian battery cell manufacturers, especially when they are competing with companies that can source materials from established international supply chains.

The report suggests that addressing the cost disadvantage will be important if India wants to expand local manufacturing and create a reliable domestic supply network for advanced chemistry cells (ACC).

India’s Battery Demand Expected to Rise Sharply

India’s battery demand is projected to increase significantly over the coming years. According to the report, demand is expected to rise from approximately 33 GWh in 2025 to 236 GWh in 2032. It could approach 600 GWh by 2037.

This expected expansion creates a substantial opportunity for domestic battery manufacturers. However, the country currently has limited capacity to supply the components required to meet future demand.

Existing Indian Manufacturing capacity covers less than 3% of the cathode, anode and electrolyte requirements projected for 2032, the report said. It also noted that there is no known domestic production of battery separators or battery-grade copper foil.

The gap between projected demand and available domestic capacity underlines the importance of developing component manufacturing alongside battery cell production.

NETRA Highlights the Need for Timely Investment Decisions

Rahul Walawalkar, Founder and President of NETRA, highlighted the difficulties new manufacturers face while establishing production facilities and qualifying their products with battery cell makers.

He said new entrants can experience high scrap rates for five to six years. In addition, battery cell manufacturers typically require 18 to 24 months to qualify a supplier before accepting materials for production.

Walawalkar said decisions taken by March 2027 could determine whether cell manufacturing plants expected to come online by March 2029 are able to purchase qualified materials produced in India.

He added that the report presents evidence and different policy options rather than making a single demand of the government.

Report Proposes Three Incentive Options

To address the cost disadvantage and expand domestic production, the report has proposed three possible incentive structures for the government. The options are designed to support manufacturers through capital assistance, operating incentives or a combination of both.

1. Capital Subsidy Along With Sales-Linked Incentive

The first proposal involves a 25% capital subsidy combined with a sales-linked operating incentive. The operating support would offset approximately 30% of the cost gap for each component, with the proposed support ranging from 5% to 18%, depending on the component.

2. Operating Incentive Without Capital Subsidy

The second option proposes an operating incentive alone. Under this structure, the government would cover around 60% of the cost gap, with component-wise support ranging from 11% to 37%. The incentive would be provided for a period of five to seven years.

3. Capital Subsidy Linked to Investor Spending

The third proposal involves a 50% capital subsidy released alongside the investor’s own spending. The report suggests that this structure could follow an approach similar to the Semicon India programme.

These proposals offer different ways to reduce the financial burden on manufacturers and encourage investment in battery component facilities. The report presents them as policy options for consideration rather than confirmed government decisions.

Government Support Could Shape India’s Battery Supply Chain

India’s growing battery requirements create an opportunity to develop a domestic manufacturing ecosystem, but the current cost and capacity gaps remain significant obstacles. The country’s dependence on imported components, particularly from China, also highlights the importance of building local production capabilities.

The report argues that policy decisions and investment commitments made over the next few years could influence whether upcoming battery cell plants can source qualified materials from Indian suppliers.

As the government considers a dedicated support scheme, the proposed incentives could form part of the discussion on improving cost competitiveness and expanding domestic capacity. The challenge will be to help Indian manufacturers reach competitive production levels while ensuring that new facilities are ready to meet the country’s rapidly growing battery demand.