To realise the ambitious target of having only electric cars by 2030, India needs to encourage the local battery industry diligently. Although manufacturers and policy makers are working with conviction to make it happen in a big way, there are still a few challenges to the scaling up of domestic battery production.
By Shruti Mishra
Cost, energy density and safety are the three crucial factors that makers keep in mind while
manufacturing electric vehicles (EVs). On the basis of this, when we asked local battery makers what kind of batteries are best suited for EVs, most of them voted for Li-ion models. High energy density, a decent cyclic life of around 700 to 1000 cycles, and the ability to withstand high charging current (leading to a reduction in charging time) are the reasons given in support of this choice.
There is no doubt that the introduction of EVs has given a new lease of life to the battery makers of India but in terms of production capabilities and volumes, we lag far behind our counterparts in the US and China. Due to the government’s aggressive push for EVs, local battery players have started innovating and adopting new technologies but hardcore manufacturing is still not happening in India, which is indirectly forcing consumers to buy high-priced foreign batteries. The unavailability of raw materials and 100 per cent dependence on imports are factors that are ruining the possibility of building a competitive local market in India.
Underlining the importance of localising battery manufacturing, Sohinder Gill, director-corporate, Society of Manufacturers of Electric Vehicles (SMEV) says, “Local manufacturing will result in bringing down the ownership costs of EVs, not initially, but in the long run, and help in reducing our dependence on the battery imports from other countries, while saving a lot of money.” He also urges the government to focus more on indigenising battery technology so that it can be made easily available to the end customer.
On a similar note, Kapil Sood, CEO, Fusion Power Systems, says that indigenous supply will make after sales support and service easier. “In the battery industry, after sales service is very important. We cannot be dependent on our overseas suppliers. We need a local player who can make the batteries in India and offer after sales service and support,” he adds.
Experts also point out that importing is not a solution when we have the ‘Make in India’ scheme in place. Besides, complete dependence on imports is killing the investment opportunities in the sector.
Hurdles in localising
Unavailability of raw materials: It is a harsh reality that the basic components, i.e., lithium cells that go into the manufacturing of li-ion batteries, are not yet produced in India. According to a NITI Aayog report titled ‘India’s Energy Storage Mission’, our country does not have reserves of some of the most important Li-ion components including lithium, cobalt and nickel, and the copper used in conductors, cables and bus bars. Hence, ensuring a reliable supply not just of the raw materials but also of the processed functional materials used in the anode and cathode, poses a challenge. Apart from this, the technologies for making these batteries are also not readily available here.
Standardisation issues: Because of rising safety concerns and the need for affordable batteries, many new variations of li-ion technologies have emerged in recent times. The prime factor for the lack of standardisation of battery technologies is the unavailability of raw materials. G.S Marjara, business head, Future Hi Tech Batteries Ltd, points out that due to an absence of raw materials, manufacturers are finding it difficult to standardise the production systems of batteries. Explaining the problem, he says, “Almost every other manufacturer is sourcing from a different cell producer with different characteristics that require different quality check systems or machines, which are as yet not made in India.”
Makers also say that too many technologies are only creating confusion and blocking the path of investments into this segment, thereby restricting India from emerging as a battery manufacturing hub. Marjara suggests that if the government drafts policies for the standardisation of EV batteries, local production levels will grow rapidly to match its ambitious EV plans.
Tax structure: Unhappy with the reformative GST regime, battery makers think that the present tax structure is the biggest roadblock in the way of making EVs affordable in India. A battery is a ‘raw material’ for EVs but under the new tax structure, it falls under the 28 per cent tax slab, which is the highest, whereas EVs fall under the 12 per cent slab. Pre-GST, batteries were subject to the prevalent state sales tax rates of between 5 to 15 per cent.
Manoj Pawar, product head, Evolute Solutions Pvt Ltd, says that till today the government has not implemented an inverted duty structure on batteries imported from abroad. “If the government comes out with some policy and incentives for serious local battery makers we can see more investment coming into this industry,” he adds. Similarly, Sood suggests that there must be some kind of GST benefit for those manufacturing batteries, since it is for producing clean energy, and the raw material should come under the same tax bracket as the end product.
What the government can do
Higher levels of localisation in the battery industry require proper investments. But the presence of multiple technologies (in the absence of standardisation) makes it difficult to achieve economies of scale, and this factor is discouraging investors. The first and foremost thing the government can do in this regard is to choose a particular battery technology on which domestic battery makers can work efficiently. Because of high demand, technology is very expensive at present. According to Ashok Kumar Prusty, executive vice president, Bry-Air (Asia) Pvt Ltd, there has to be some handholding from the government, without which nobody is going to invest such huge sums of money to set up a manufacturing base. “The government should be the key investor in the beginning and as the business gathers pace, hand it over to the private entity to run it because, in the end, only the state will be able to make it efficient and profitable,” Prusty suggests. Since it’s nearly impossible for local battery players to purchase these technologies on their own, Prusty also recommends that local manufacturers should form partnerships with large technology conglomerates, which will help in boosting the investment scenario.