India’s Battery Component Manufacturers Face Up To 61% Cost Gap Against Global Imports, Study Recommends Targeted Incentives—Report

India’s battery component manufacturing industry faces a significant cost disadvantage compared with global suppliers, with domestic production costs ranging from 18% to 61% higher than imported alternatives, according to a new study released by the Ministry of Heavy Industries. The report highlights the challenges facing Indian manufacturers of cathode materials, anode materials, electrolytes, separators and copper foil, and outlines policy measures to strengthen domestic production as the government considers a targeted support scheme for battery component manufacturers.

The study, titled “Accelerating India’s ACC Component Manufacturing Ecosystem,” was prepared by the Netzero Energy Transition Alliance (NETRA) in collaboration with ARCI, CSIR-NCL, IIT Madras and Deloitte. It draws on cost and industry data collected from more than 20 Indian companies involved in manufacturing or planning battery component facilities.

The report identifies China’s dominance in the global battery supply chain as a major concern for India’s energy storage ambitions. In 2025, China accounted for 99% of global LFP cathode material supply, 90% of anode material, 93% of electrolyte, 85% of separators and 74% of copper foil production. Although China’s export restrictions on key battery materials and technologies introduced in October 2025 have been suspended, the possibility of future restrictions highlights the importance of developing domestic manufacturing capabilities.

According to the study, the reasons behind India’s cost disadvantage differ across battery components. High raw material prices are the primary challenge for cathode materials, electrolytes and copper foil. Graphite anode manufacturers face higher conversion costs, energy expenses, depreciation and financing costs. Meanwhile, separator production requires substantial capital investment and specialised imported technology, while low initial plant utilisation increases manufacturing costs.

The report also highlights the difference in manufacturing and financing costs between India and China. Establishing cathode or anode manufacturing facilities in India costs more than twice as much as in China. Indian manufacturers face borrowing rates ranging from 8.5% to 16%, compared with approximately 3.1% in China. Additionally, new suppliers generally require 18 to 24 months to complete qualification processes with battery cell manufacturers, creating challenges for newly established facilities.

NETRA Co-Founder and Executive Director Debi Prasad Dash said the cost disadvantages vary across components, making a uniform incentive structure unsuitable. The study therefore presents three component-specific support models that would allow manufacturers to receive targeted assistance while continuing to bear a meaningful share of production costs.

The first proposal combines a 25% capital subsidy with a sales-linked operating incentive covering approximately 30% of the cost gap. The second recommends operating incentives alone, covering around 60% of the gap for five to seven years. The third proposes a 50% capital subsidy released alongside investors’ own expenditure, following an approach similar to the Semicon India programme.

The report also highlights the growing demand for battery storage in India. Battery demand is projected to increase from approximately 33 GWh in 2025 to 236 GWh by 2032 and nearly 600 GWh by 2037. Battery cell components account for around 76% of total cell manufacturing costs. However, India’s existing manufacturing capacity covers less than 3% of the projected 2032 requirements for cathode, anode and electrolyte materials. The country also lacks known domestic production of battery separators and battery-grade copper foil.

NETRA Founder and President Dr Rahul Walawalkar emphasised that developing domestic battery manufacturing capabilities requires investment in material processing, research and development, quality standards and supplier qualification. He said decisions taken by March 2027 would influence whether upcoming battery cell manufacturing facilities expected by March 2029 could source qualified materials domestically.

Beyond financial incentives, the study recommends establishing a national network for battery component testing, certification and qualification by utilising existing laboratories. It also proposes supporting domestic battery-grade raw material processing, manufacturing of specialised plant and machinery, and the development of integrated battery material clusters.

The report notes that the existing Electronics Component Manufacturing Scheme supports battery components primarily for digital devices, while electric mobility and grid-scale energy storage are expected to account for more than 90% of India’s future battery demand. It calls for broader policy support to address this gap and accelerate the development of a competitive domestic battery component manufacturing ecosystem.