BT BIG STORY: India has failed to build an ecosystem of battery cells. Can a new PLI change this?

More Indians are opting for electric cars and scooters, turning what was once a niche market into an increasingly common sight on the country’s roads. The trend accelerated after the war in West Asia pushed up fuel prices. Electric vehicles now account for as much as 8% of all new car sales and 11% of new two-wheeler sales.

Rapid electrification may have helped India reduce its fuel import bill, but it has also accelerated imports of another highly specialised commodity—the battery cell.

India’s cell imports surged 94% year-on-year to Rs 15,721 crore in the first quarter of 2026-27, according to commerce ministry data.

In July 2026, battery-cell imports soared 159% to Rs 7,209 crore, compared with Rs 2,772 crore in the corresponding month last year. During FY26, lithium-ion cell imports stood at Rs 41,667 crore, up 64% year-on-year. China accounted for roughly 85% of the total.

The sharp increase in battery-cell imports comes as the government promotes electrification across automobile segments through incentives such as PM E-Drive, PM-eBus Sewa and the production-linked incentive (PLI) scheme for automobiles and auto components.

Despite the massive demand for electric mobility, domestic supply of lithium-ion cells remains negligible, as most Indian companies, barring Ola Electric, lack the technical know-how to produce them.

To make India self-reliant in battery cells, the government rolled out an Rs 18,100-crore PLI scheme for Advanced Chemistry Cells (ACC) in May 2021. Although beneficiaries were awarded 40 GWh (gigawatt-hours) of battery-cell capacity, production has barely begun.

Apart from Bhavish Aggarwal-led Ola Cell Technologies, no PLI beneficiary has set up cell-manufacturing capacity. Even Ola Cell Technologies has begun commercial operations with only 2.5 GWh of capacity, despite securing 20 GWh under the ACC PLI scheme. No cell maker has received an incentive yet.

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With little progress in cell manufacturing, the government is now planning a new Rs 12,000-crore PLI scheme for battery-cell components such as cathode and anode active materials, electrolytes and copper-foil separators. The aim is to develop a domestic raw-material manufacturing ecosystem.

The ACC PLI scheme has not worked so far because incentives for cell components were needed first, Anurag Choudhary, Chairman, Managing Director and CEO of Himadri Speciality Chemical Ltd, told Business Today.

“Unless you have the raw-material components, you will still be an assembler, importing raw materials and merely making cells,” Choudhary said.

According to the Himadri CMD, the government has a critical role to play. “This is going to be a big industry,” he said, adding that the best approach is to build the entire value chain within the country.

Himadri plans to set up a 2,000-tonne plant in Kolkata to produce cathode active materials, a key raw material for LFP cells. The company expects the plant to become operational by December 2026. “We are also working on a 40,000-metric-tonne plant, which will be operational in FY28,” Choudhary said.

Himadri has already started a 200-tonne anode plant in West Bengal, where it produces anode material from coke and coal tar. “Cathode and anode together account for 65% of a cell’s cost. We are going to be present in both products,” Choudhary said.

Himadri has outlined an investment of Rs 4,200 crore in cathode active materials, which comprise 25% lithium carbonate. Since lithium is not mined in India, the company plans to import it from countries such as Argentina, Bolivia and Chile.

Electrolyte is the only component that cell producers buy locally; everything else comes from China because no Indian company produces raw materials at scale, according to Vikram Handa, founder and managing director of Epsilon Advanced Materials.

More than 90% of cathode and anode active materials are processed in China, Handa added.

The government has been pursuing several measures, but the industry continues to struggle, Handa said. “I think the intention of the ACC PLI was that demand is definitely coming, so let’s promote this segment and get started. In the past three to four years, the challenge has been that this is a high-technology space that is evolving extremely fast,” he explained.

A lack of investment in technology is another reason for India’s limited battery-cell production, Handa said. “The biggest challenge is risk capital. Today, someone putting in Rs 2,000 crore wants to earn returns in the next quarter. In this industry, that’s difficult. Are companies ready to invest 8-10% in R&D? Not many are. The government can only nudge us and provide policy enablers,” he said.

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To manufacture cells locally, India must view the battery value chain as a whole rather than incentivise each part in isolation, Handa believes. “If we want to localise cell manufacturing, we also need to localise the materials and components that go into the cell. Otherwise, we will continue to depend on imports for a large part of the value chain, which could also become a national-security issue in the future,” he said.

Epsilon currently produces graphite anode material at its 2,000-tonne plant in India, which can support 2 GWh of cell capacity. It aims to scale capacity to 30,000 tonnes by 2028.

Epsilon’s anode-material project has secured approval under MeitY’s ECMS scheme, with Rs 145 crore in capex support covering 25% of the capital investment.

The price of localisation

Battery cells produced in India are expected to cost roughly 20% more than Chinese imports, according to Himadri’s Choudhary.

“China’s strategy is to sell below cost so that no one else in the world produces these products. It sells below cost so that others do not find production commercially viable,” he explained.

To make India self-reliant in battery cells, Choudhary said both operational and capital incentives are needed. “It’s not that we need lifelong support, but we do need it in the initial years,” he said.

“There is a need for government support for cell components. China sells cells at highly competitive prices, so there are hardly any margins. To make the business viable, the Indian government must introduce a component scheme,” Choudhary said.

An executive at an Indian cell company told Epsilon’s Handa that even if it sourced everything from China at the lowest available price and bought nothing locally, its cell would still be 25% more expensive than a Chinese cell.

Lead-acid battery maker Amara Raja Energy & Mobility — which is developing technical know-how in-house after its proposed partnership with China’s Gotion hit a wall — is gradually warming to locally made cell components for its recently commissioned Customer Qualification Plant (CQP) at the Giga Corridor in Telangana. With an initial capacity of 60 MWh, the plant will manufacture lithium-ion cells that customers can test and validate before commercial production begins.

“We mainly use imported materials today. But Indian materials are becoming available, and we have started producing batches of cells in which selected local materials are substituted. This is happening gradually. We introduce one material change in each batch so that we can better track any variability in performance,” Vikramadithya Gourineni, executive director of Amara Raja Energy & Mobility, told BT.

Although the ACC PLI scheme was well-intentioned, the projected battery-cell capacity has not materialised, Gourineni said. “I look at other government policies that could prove effective. The Indian Semiconductor Mission has a much larger outlay, and its approach is fundamentally different. A high-powered inter-ministerial committee examines access to technology, the product’s place in the ecosystem, operational feasibility and strategic customer partnerships to ensure offtake. Once these aspects have been assessed, funds are disbursed through a milestone-based approach,” he said.

Gourineni drew a parallel with the India Semiconductor Mission, for which the government has approved a much larger fiscal outlay of Rs 2.03 lakh crore across two phases.

“The government is also taking a much more entrepreneurial approach, underwriting a significant share of the project-execution risk,” he explained.

Amara Raja plans to invest Rs 9,500 crore to build 16 GWh of cell capacity in phases by 2030-31.

The technology barrier

Despite the recent thaw in India-China ties, several Indian companies, including Reliance Industries and JSW Group, are struggling to acquire the technical know-how needed for cell manufacturing. At the recently concluded BRICS Summit in New Delhi, Prime Minister Narendra Modi said the weaponisation of technology and critical minerals could hinder the bloc’s shared progress.

Reliance Industries Ltd (RIL), through its subsidiaries Reliance New Energy Battery Ltd and Reliance New Energy Battery Storage Ltd, was awarded 15 GWh of capacity under the ACC PLI scheme. The conglomerate has yet to install any capacity.

Anant Ambani, Executive Director of Reliance Industries, said at the company’s 49th Annual General Meeting that access to battery technology was being “weaponised”. “In a world where supply chains are being contested and access to technology is being weaponised, building world-scale battery-manufacturing capacity in India is not merely a business decision. It is a strategic imperative for national resilience,” Ambani said.

He added that Reliance New Energy planned to commission the first phase of its 40-gigawatt-hour (GWh) battery-cell gigafactory this year, as all the equipment required to produce cells had been delivered.

Earlier in August, JSW Group scion Parth Jindal said China was guarding LFP cell-manufacturing technology “like a weapon”, prompting the steel-to-automobiles group to put its plans to manufacture battery cells in India on hold. “We are very keen to make cells in India. LFP (lithium iron phosphate) technology is currently not available to us. The hunt is on for a technology tie-up. We have not secured one, so the project is currently on hold,” Jindal said. “LFP cells come only from China, and they are not sharing the technology. We are ready to invest and manufacture in India.”

India wants to manufacture batteries at home and reduce its dependence on China, but Indian companies still need Chinese technology to make that happen. Developing homegrown alternatives, meanwhile, will require significant investment and sustained government support.