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Is India Dominating Lithium-ion Battery Manufacturing?

Created on 19 Jan 2024

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Is India Dominating Lithium-ion Battery Manufacturing?

From the automotive industry, including Electric Vehicles (EVs), to renewable energy storage, consumer electronics, and grid management, all these sectors are likely to benefit from the growth of one industry- the lithium-ion battery. 
 
In India, the lithium-ion battery industry is expected to grow a lot in the next five years, and by 2030, there could be a significant recycling market for these batteries. Now, pivoting to a different aspect, are you familiar with ACC? Not the cement, but ACC batteries. Let me provide some information.

Advanced Chemistry Cell (ACC) batteries are essential for future low-carbon transportation and energy systems. With support from the government, India's ACC battery manufacturing business is growing. 

So, you're probably wondering why on earth I'm diving into this topic. Well, let me tell you that to make ACC batteries, it's crucial to have a steady supply of important minerals like lithium, cobalt, nickel, and graphite

India has discovered lithium reserves in Jammu and Kashmir and Degana, Rajasthan, which could meet a large part of the country's demand for lithium, according to the Geological Survey of India (GSI) and mining officials.

The Growing Demand for Lithium-ion Batteries in India

903 GWh- that's the substantial demand for energy storage in India by 2030! This demand is spread across technologies like lithium-ion, redox flow, and solid-state batteries.

The lithium-ion battery market in India is set to skyrocket, growing from 20 Gigawatt hours (GWh) in 2022 to a massive 220 GWh by 2030, with a yearly growth rate of 50%. 

Right now, Indian companies are mainly focused on making battery cells. But as more of these units pop up, the focus will shift to the earlier stages of the process, like making materials for batteries- things like graphite anodes and cathodes, electrolytes, separators, and current collectors.
India is serious about reducing greenhouse gas emissions from its electricity and transport sectors. 

To fight climate change, the plan is to clean up these areas and boost renewable energy. Lithium-ion batteries (LIBs) are expected to rule the energy storage scene, growing from 2.9 GWh in 2018 to around 132 GWh by 2030

The demand for LIBs is driven by the automotive industry, renewable energy, and gadgets, making the total expected demand a huge 903 GWh by 2030.

Applications of Lithium-ion Batteries

Lithium-ion batteries are widely used across various applications thanks to their impressive features, such as high energy density, lightweight design, and rechargeable capability

Explore the key applications of lithium-ion batteries:

1. Consumer Electronics

Li-ion batteries are commonly found in gadgets like smartphones, laptops, tablets, cameras, and wearable devices. They're great for these devices because they last a long time and are small, making them easily portable.

2. Electric Vehicles (EVs)

Li-ion batteries are crucial for electric cars, buses, bikes, and scooters. They give power to make these vehicles go, and because they can hold a lot of energy and provide a steady flow of power, they help electric vehicles drive longer distances.

3. Power Tools

Li-ion batteries are used in tools like drills, saws, and screwdrivers. They're suitable for professionals and people who like DIY projects because they're lightweight and can give much power.

4. Renewable Energy Storage

Li-ion batteries help save energy from sources like the sun and wind. When these sources make more energy than we need, the batteries store it. Later, when we need more power, the batteries give it back, ensuring electricity even when the sun isn't shining or the wind isn't blowing.

5. Grid Energy Storage

Li-ion batteries are used to keep the electrical grid stable. They save extra electricity when we don't need much and return it when we need more. This helps make sure the electricity grid works well.

6. Medical Devices

Li-ion batteries power medical gadgets like monitors, diagnostic tools, and treatment devices. They're suitable for these because they're small and last long.

7. Aerospace Applications

Li-ion batteries are used in things like satellites and drones. Because they're lightweight and can store a lot of energy, they're perfect for flying machines in space or the sky.

8. Marine and Underwater Devices

Li-ion batteries are used in boats, submarines, and underwater drones. They help these devices move using electricity and are efficient in tough environments like the ocean.

9. Backup Power Systems

Li-ion batteries are used as backups in case the power goes out. They help keep important things like data centres, emergency systems, and critical infrastructure running when there's no regular electricity.

In summary, Li-ion batteries are super versatile and used in many things because they last long, are small, and can be recharged. They're driving advancements in various industries.

Government Initiatives Driving the LIB Manufacturing Industry

To spur the growth of the battery manufacturing industry in India, the government has implemented key initiatives:

1. FAME-II Scheme

Launched in 2015, the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) initiative focuses on increasing electric vehicle (EV) adoption and domestic manufacturing capabilities. 

FAME-II allocates a substantial budget of ₹10,000 crore to incentivise Advanced Chemistry Cells (ACC) and battery pack manufacturing, supporting EV production and charging infrastructure development.

2. Production Linked Incentives (PLIs) for Advance Chemistry Cells

Introduced to attract investments in ACC manufacturing, the PLI scheme aims to establish local manufacturing capacities of 50 GWh of ACC and 5 GWh of niche ACC. Key players like Reliance New Energy Solar, Ola Electric, and Rajesh Exports have partnered with the government to receive incentives.

3. Union Budget 2023

The latest Union Budget introduced several incentives to boost LIB manufacturing in India. These include:

  • Exemptions from basic customs duty on machinery used in LIB manufacturing
  • Reduced customs duty on imported LIBs
  • Concessional customs taxes for EVs and hybrid batteries
  • Additional funding was allocated for battery recycling

Curious about Budget 2024's impact on your finances? Find out here.

4. 100% FDI Permitted

The Indian Government welcomes global players by allowing 100% Foreign Direct Investment (FDI). Simultaneously, there are no entry barriers for domestic players interested in the battery pack/BMS segment.

The Future of LIB Manufacturing in India

Apart from the FAME-II scheme and PLIs for ACC, which are driving investments and boosting domestic manufacturing capabilities, recycling LIBs is gaining attention as a sustainable solution, with collaborations capturing opportunities in the recycling market.

1. Raw Material Challenges

  • Limited supply of lithium, nickel, cobalt, and manganese precursors for battery production.
  • India needs 193 thousand tonnes of cathode material, 98K tonnes of anode material, 91K tonnes of aluminium, 41K tonnes of copper, and 8K tonnes of LiPF6 electrolyte by 2030 for 100 GWh of batteries.
  • Exploring long-term contracts with raw material suppliers and investing in mineral-rich nations.

2. Infrastructure Hurdles

  • Weak infrastructure across the supply chain and limited deployment expertise.
  • India must gain more control over the lithium-ion battery supply chain to meet growing demand.

3. Global Decarbonisation Impact

  • Energy storage systems are crucial for global decarbonisation, leading to a surge in demand.
  • India aims to be a manufacturing powerhouse and meet domestic demand through local production.

4. Foreign Policy Adaptation

  • India's foreign policy should adapt to changing trends and prioritise strategic initiatives in key regions.
  • The availability of minerals at reasonable rates is crucial for global competitiveness.

5. R&D and Recycling Focus

  • Concentrated efforts on R&D, process optimisation, and recycling can reduce the need for importing cell components.
  • Several courses need to be developed to meet expanding employment demands in the industry.

Developing advanced technologies, ensuring battery safety, and optimising the supply chain can establish India as a global leader in LIB manufacturing.

The Bottom Line

In summary, India's LIB manufacturing industry is on a rocket-fueled trajectory, propelled by governmental backing, surging demand, and hefty investments. 

Positioned within a favourable policy framework and a commitment to sustainability, India is set to take centre stage in the LIB market.

After all, in the grand race of energy evolution, India is not just keeping pace; it's leading the charge with a wink and a spark!

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Sakshi Dhakre

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Sakshi is an adventurous spirit who enjoys both the intellectual stimulation of Finance and the sensory experiences of good food and nature’s beauty. She has a passion for delving into complex financial topics and distilling them down into easy-to-understand insights. When she's not poring over financial reports, you might find her exploring a new corner of the city, trying out new restaurants and cuisines or admiring the beauty of the night sky.

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