India scales domestic battery manufacturing to curb rising import dependence

India is accelerating its domestic battery manufacturing capacity to address a growing reliance on imports as the nation’s electric vehicle market expands. According to pv magazine India, the country registered 25.5 lakh EVs during the 2025-26 fiscal year. This shift toward local production comes as the sector experiences a notable rise in adoption across the domestic market.

Data indicates that EV penetration reached 12% between April and September 2026. While these figures highlight a clear upward trend in vehicle registrations, industry analysts suggest that scaling the domestic battery supply chain is a necessary response to the current import dependence. As the infrastructure for battery assembly grows, manufacturers are working to align their output with the increasing demand observed throughout the first half of the 2026 fiscal year.

Manufacturing Progress

Government support for the sector centers on the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) battery storage, which carries an outlay of INR 18,100 crore. This policy framework seeks to catalyze a target capacity of 50 GWh to reduce reliance on external suppliers. However, progress remains in the early stages, with only 1.4 GWh of this PLI-backed capacity commissioned as of October 2025.

Milestone / Entity	Capacity (GWh)	Status
PLI Scheme Target	50	Goal
Ola Electric	1.4	Commissioned
Exide	6	Commissioned

The discrepancy between the ambitious national targets and the current operational output reflects the logistical complexities of scaling high-tech manufacturing. Typically, such large-scale facilities require significant lead times for equipment procurement, site commissioning, and the establishment of local supply chains for raw materials. For developers, the transition from a government-backed commitment to a fully operational facility involves navigating stringent quality benchmarks and infrastructure requirements. The commissioning of the 6 GWh cell plant near Bengaluru by Exide in September 2026 represents a substantial addition to the domestic footprint. Meanwhile, Ola Electric has adjusted its trajectory, revising its planned output from 20 GWh down to 5 GWh by the 2029 fiscal year. Such recalibrations are common in emerging industries as firms assess market demand and operational efficiency.

Supply Chain Security

Securing a reliable flow of raw materials remains the primary hurdle for domestic battery producers. While the cost of battery packs varies significantly—with LFP packs averaging USD 81/kWh and NMC packs averaging USD 128/kWh—the stability of these prices depends heavily on upstream mineral availability. Fluctuations in global commodity markets often force manufacturers to absorb costs or pass them on to consumers, complicating long-term investment planning.

To mitigate this volatility, the government launched the National Critical Mineral Mission in January 2025 with an outlay of INR 16,300 crore. Such initiatives typically aim to reduce the vulnerability of downstream manufacturers by fostering domestic exploration and refining capabilities. For developers and grid operators, building a localized supply chain is essential to ensure that the rapid expansion of renewable infrastructure—which reached 164.6 GW of solar capacity by July 2026—is matched by sufficient storage capability. When a nation relies heavily on external mineral sources, it faces exposure to geopolitical risks and supply disruptions. By prioritizing mineral security, policymakers seek to create a buffer that allows the energy transition to proceed without being derailed by sudden surges in raw material pricing or shortages in the global market. This systemic approach is fundamental to sustaining the energy grid's reliability.

Circular Economy Mandates

• Battery Waste Management Rules require 90% material recovery from FY2026-27.
• New batteries must contain 5% recycled material from FY2027-28.
• Union Cabinet approved INR 1,500 crore for recycling capacity in September 2025.
• Recycling scheme targets 270,000 tonnes annual capacity for battery scrap.

Regulatory frameworks now emphasize closing the loop on battery lifecycles to ensure long-term sustainability. By mandating high recovery rates, authorities aim to transform discarded cells into a secondary source of raw materials. Typically, such policies function by creating a closed-loop system where manufacturers integrate reclaimed minerals back into their production lines, reducing the need for virgin mining. For investors, this shift offers a hedge against the price volatility of raw commodities by lowering dependency on external imports.

The financial support provided for recycling infrastructure enables the development of specialized processing facilities designed to handle large volumes of scrap. Such plants usually employ hydrometallurgical or pyrometallurgical processes to extract valuable metals like lithium, cobalt, and nickel from spent units. For the broader industry, these mandates standardize the handling of hazardous materials and encourage the growth of a secondary market for battery components. Integrating recycled content into new cells requires rigorous quality control to ensure performance parity with primary materials, yet it remains a standard practice for firms seeking to meet environmental compliance while stabilizing their supply chains against global market fluctuations.

What to watch

As India scales its domestic production capabilities, the fiscal impact of continued import reliance remains a central concern for policymakers and market observers. With the country having imported over USD 3 billion worth of lithium-ion batteries in the 2025 fiscal year, the trajectory of this spending is critical. Industry projections suggest that without a more rapid expansion of local manufacturing, the annual import bill could exceed USD 23 billion by the 2030 fiscal year.

For stakeholders, the primary question is whether the current pace of commissioning can outrun this rising demand. Investors will likely look for signs of supply chain stabilization, particularly regarding the availability of refined minerals. Meanwhile, developers must balance the pressure to lower costs with the technical requirements of high-performance cell production. Moving forward, the ability of firms to meet both production milestones and circular economy mandates will determine whether the domestic sector can effectively mitigate these projected financial outflows.