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The India lithium-ion battery market has experienced remarkable growth in recent years. Some of the primary drivers are favourable government policies and initiatives, increasing demand from electric vehicles (EVs), and consumer electronics sector. The Indian government has implemented favourable policies and incentives to promote EV adoption, creating a conducive environment for the lithium-ion battery market. Additionally, the push for renewable energy integration and grid stabilization has further boosted the demand for battery storage solutions, including lithium-ion batteries. 

However, the market also faces certain restraints. One significant challenge is the high lithium-ion battery prices, making EVs and energy storage systems comparatively expensive. Supply chain constraints, particularly for raw materials like lithium and cobalt, can also pose a challenge. Furthermore, the industry also faces issues related to li ion battery safety, recycling, and environmental impact.

Despite these challenges, the India Lithium ion Battery Market presents immense growth potential, driven by the government's support, increasing consumer awareness, and advancements in battery technology.

Drivers

Supportive Government Policies and Regulations

India has committed to reducing its greenhouse gas (GHG) emissions intensity of its gross domestic product (GDP) by 45% below 2005 levels by the year 2031. 

Following the announcement of its emission reduction target, the government undertook new initiatives and policies to cut emissions majorly from energy and transportation sector to reach its target. As part of which the government is actively promoting the adoption of electric vehicles and renewable energy sources.

By 2031, India aims for EV sales penetration of 30% in private cars, 70% in commercial vehicles, 40% in buses, and 80% in two and three-wheelers. Add to this the Government of India also targets non-fossil energy capacity additions of 500 gigawatts (GW) by 2031. Both of which assert the demand for lithium-ion batteries.

To strengthen lithium battery value chain and promote local manufacturing of lithium batteries to meet the growing demand, government has introduced policies to encourage local manufacturing of lithium-ion cells. For instance, Indian government doubled the import duty on lithium-ion cells and removed the customs duty on the import of capital goods and machinery used in the manufacturing of lithium-ion cells.

The government is also providing incentives for the production of lithium batteries. For example, The ACC (advanced chemistry cells) PLI scheme is a part of the government's efforts to make India a global hub for manufacturing of advanced batteries.

The PLI scheme will provide financial assistance to companies that set up manufacturing plants for ACCs in India. The incentive will be based on the production volume of ACCs, with a maximum incentive of INR 40,000 per kilowatt-hour (kWh). The scheme is expected to attract investments of up to INR 18,100 crore (USD 2.3 billion) and create over 10,000 jobs in the ACC manufacturing sector.

The Indian government's support for the lithium ion battery manufacturing industry is a major step towards making India a global leader in this sector. Following the recent discoveries of lithium reserves in India, the industry is expected to grow rapidly in the coming years, and India is well-positioned to capture a significant market share.

Segment Analysis

The automotive sector is one of the largest and fastest-growing segments of the lithium-ion battery market in India. The growth of this segment is being driven by the increasing adoption of electric vehicles (EVs) in the country. The country has set for itself a target of 30% electric vehicle sales by 2031, due to which the government actively promoting the adoption of electric vehicles which in turn is expected to drive demand for lithium-ion batteries.

The India's electric vehicle (EV) market has shown impressive growth in vehicle sales past year (2023). The 1.53 million EVs sold in 2023 represent a significant 50% year-over-year increase over the one million units sold in 2022. The two- and three-wheeler markets were responsible for the majority of the growth. As they are the main drivers of EV sales because they are cheaper than passenger electric cars or large commercial vehicles.

The Indian government's push for clean and sustainable mobility has played a crucial role in the growth of the automotive sector in the lithium-ion battery market. Initiatives such as the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, which offers financial incentives and subsidies, have incentivized the production and adoption of EVs in the country. These policies aim to reduce vehicular emissions, decrease dependence on fossil fuels, and promote a greener transportation ecosystem.

The automotive sector's shift towards electric mobility has led to a rising demand for lithium-ion batteries as the primary energy storage solution. Lithium-ion batteries offer several advantages for EVs, including higher energy density, longer lifespan, and faster charging capabilities compared to traditional lead-acid batteries. These batteries have become the preferred choice for automakers, enabling them to develop EV models with longer ranges and improved performance.

The growing number of EV manufacturers in the Indian EV market and the expanding charging infrastructure across the country further contribute to the demand for EV batteries in the automotive sector. Both domestic and international automotive companies are investing in EV production facilities in India, driving the need for local lithium-ion battery manufacturing capabilities.

Furthermore, the automotive sector's adoption of lithium-ion batteries extends beyond battery electric vehicle (BEVs) to hybrid electric vehicles, two-wheelers, and three-wheelers. Lithium-ion batteries provide enhanced efficiency and power delivery, making them suitable for a range of automotive applications.

Current Scenario

The current scenario of lithium-ion batteries manufacturing in India is in a nascent stage. India currently imports most of its lithium-ion cells, and manufactures significant share of battery packs locally. However, the government has taken some steps to encourage domestic cell manufacturing, such as the Production Linked Incentive (PLI) scheme for advanced chemistry cells (ACCs). This scheme aims to attract investments in ACC manufacturing and create a domestic supply chain for lithium-ion batteries.

The PLI scheme has been successful in attracting investments from several major companies, including Reliance Industries, Ola Electric, and Mahindra & Mahindra. These companies are planning to set up ACC manufacturing plants in India, which will help to boost domestic manufacturing and reduce reliance on imports.

Recent Developments

• In January 2024, Altmin Private Ltd., a prominent Indian manufacturer specializing in cathode active material for lithium-ion batteries, unveiled its strategic initiative to invest IJS$ 100 million over the next five years.
• The Indian state of Karnataka and US battery firm IBC signed a MoU to setup a INR 8000 crore recyclable lithium-ion battery unit, in August 2023.
• Tata Group, one of India's leading conglomerates, has entered a memorandum of understanding (MoU) with the state government of Gujarat to establish a lithium-ion cell manufacturing facility. This proposed factory, located in Gujarat, aims to have a capacity of 20 GWh (gigawatt-hours). In the initial phase, Tata Group plans to invest an estimated INR 13,000 crore (USD 1.57 billion) for the construction and development of the facility. 
• In June 2023, the government approved the import of pet coke as a feedstock for the production of graphite anode material for lithium-ion batteries. The import of pet coke for the purpose of fuel is absolutely prohibited.
• Amara Raja Batteries Ltd. Lays foundation stone for its USD 1.14 billion lithium ion battery manufacturing gigafactory in Telangana, in May 2023.
• OLA Electric commences the construction of its battery cell gigafactory in Tamil Nadu. It is claimed as one of the most advanced and largest cell manufacturing facilities in the world, with a capacity of 10 gigatonnes per year.
• In Nov 2022, Attero recycling private limited announced its plans to invest USD 72.4 million in setting up ‘world’s most advanced’ Li-ion battery recycling plant in Telangana. The new facility will cover 50 acres and will expand Attero's Li-ion spent batteries recycling capacity to 19,500 MT by the end of 2023, up from its current capacity of 4,500 MT. 
• Log9 Materials, a Bengaluru-based EV battery technology startup, has opened its first lithium-ion cell manufacturing facility on its site in Jakkur. The new EV cell production line will cater to LTO (lithium titanate) and LFP (lithium iron phosphate) cell manufacturing and will have an initial capacity of 50 MWh. Log9 Materials claims to be the country's first commercial lithium-ion cell production facility.

India Lithium ion Battery Market

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India Lithium-ion (Li-ion) Batteries Market Drivers & Restraints

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