India's EV market is poised for exponential growth, from $3.21 billion in 2022 to $113.99 billion by 2029. The battery market is also set to skyrocket, from $16.77 billion in 2023 to $27.70 billion by 2028. To reduce reliance on imports, India has taken steps like duty-free imports of critical battery metals and lowered duties. Experts call for more incentives, especially for anode, cathode, and electrolyte materials. Localizing 70-80% of battery production can drastically cut import dependency. However, large-scale manufacturing and gaining global trust pose challenges. Collaboration between Indian suppliers and global players can help overcome these hurdles.
India's electric vehicle (EV) market is poised for exponential growth, set to expand from $3.21 billion in 2022 to a staggering $113.99 billion by 2029, at a remarkable CAGR of 66.52%. Alongside this surge in EV adoption, the Indian EV battery market is projected to skyrocket from $16.77 billion in 2023 to $27.70 billion by 2028.
This remarkable trajectory is fueled by India's determination to reduce its reliance on battery imports, particularly from China, which currently accounts for a staggering 85% of the country's lithium-ion battery imports. To combat this imbalance, the Indian government has taken decisive steps to incentivize the localization of battery manufacturing and material production.
The 2024 Union Budget was a game-changer, offering a significant boost to the industry. It allowed for customs duty-free imports of critical battery metals like lithium, cobalt, and nickel, while also reducing the duty on graphite to 2.5%. Additionally, the budget extended zero customs duty on the import of capital goods for EV battery manufacturing until March 2029, providing a crucial runway for the industry to thrive.
Experts like Vikram Handa, the founder and managing director of Epsilon Advanced Materials (EAM), emphasize the need for even more incentives, particularly for companies involved in the production of anode, cathode, and electrolyte materials. These are the end-users of critical minerals, and their investment in domestic and foreign mineral assets will be crucial in reducing India's reliance on imports.
The key to unlocking this potential lies in the strategic development of India's battery ecosystem. By localizing 70%-80% of battery production, India can drastically reduce its import dependency, a feat that is well within reach. Materials account for around 60% of a battery cell's cost, and with the right investments in cell manufacturing and battery material-making capabilities, India can ensure that the value of critical metals it needs to import is only 20%-30%.
However, the path to building a thriving battery ecosystem in India is not without its challenges. Establishing large-scale manufacturing plants requires significant investments and long lead times, and securing offtake agreements with EV manufacturers is crucial. Indian battery material suppliers must demonstrate their quality and technological capabilities to gain the trust of global cell makers, who have traditionally relied on established Chinese suppliers.
Collaboration will be the key to overcoming these hurdles. Indian suppliers must form technical partnerships with experienced global players, leveraging their expertise and scale to accelerate the development process. Cell makers, on the other hand, should consider splitting their supply contracts between local and Chinese suppliers, ensuring a stable and diversified supply chain.
As the Indian EV market continues to soar, the opportunity for a homegrown battery industry is too compelling to ignore. With the right policies, investments, and collaborative efforts, India is poised to become a global leader in battery manufacturing, reducing its import dependency and fueling the dreams of a sustainable, electric future.
Comments