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New Delhi: Indian battery component manufacturers face production costs that are 18 percent to 61 percent higher than imported alternatives, putting domestic suppliers at a significant competitive disadvantage, according to a report released by the Ministry of Heavy Industries.
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 from more than 20 Indian companies.
The findings come as the government considers a dedicated incentive scheme to strengthen domestic manufacturing of advanced chemistry cell (ACC) battery components.
The report highlights India's heavy dependence on imported battery materials, particularly from China, which dominates global supplies of critical components.
Domestic manufacturers of cathode and anode materials, electrolytes, separators and battery-grade copper foil face substantial cost disadvantages compared with overseas suppliers.
Battery components account for approximately 76 percent of total cell manufacturing costs, making their domestic production critical to India's ambitions in electric mobility and energy storage.
"The cost data in this report comes from Indian companies that are building or planning these plants, and it shows that the gap has a different cause in each component," said Debi Prasad Dash, Co-Founder and Executive Director, NETRA.
India's battery demand is projected to increase more than sevenfold, from approximately 33 GWh in 2025 to 236 GWh by 2032, before approaching 600 GWh by 2037.
However, existing domestic manufacturing capacity can meet less than 3 percent of the projected 2032 requirements for cathode materials, anode materials and electrolytes.
The report also found no known domestic production of battery separators or battery-grade copper foil, exposing major gaps in the country's battery supply chain.
NETRA Founder and President Rahul Walawalkar warned that delays in policy intervention could affect India's ability to establish a competitive domestic component industry.
"New entrants face high scrap rates for five to six years, and cell makers take 18 to 24 months to qualify a supplier. Decisions taken by March 2027 will decide whether the cell plants coming online by March 2029 can buy qualified materials made in India. We offer this evidence with options, not a single demand," he said.
To address the cost disadvantage and accelerate domestic manufacturing, the study recommends three alternative incentive structures for government consideration.
Capital subsidy with operating support: A 25 percent capital subsidy combined with sales-linked incentives covering approximately 30 percent of the cost gap, translating into support of 5–18 percent depending on the component.
Operating incentive: Financial support covering approximately 60 percent of the cost gap, equivalent to 11–37 percent of component costs, for five to seven years.
Higher capital subsidy: A 50 percent capital subsidy disbursed alongside investors' expenditure, broadly following the Semicon India programme model.
The report suggests that targeted financial assistance could help domestic manufacturers overcome high initial production costs, lengthy supplier qualification periods and competition from established overseas producers.
The findings underline a critical challenge for India's energy transition: while investments in battery cell manufacturing are expanding, the domestic supply chain for essential components remains underdeveloped.
Without timely policy support and investment in component manufacturing, India's growing battery industry could remain heavily dependent on imported materials even as domestic cell production capacity increases.
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