India currently imports nearly all of its Li-ion batteries, but according to CareEdge Ratings, this dependency is anticipated to decrease to 20% by FY27. This reduction is expected despite a substantial increase in demand, owing to the construction of large-scale integrated capacities for Li-ion battery storage.
The demand for lithium-ion batteries in India is projected to surge to 54 gigawatt hours (GWh) by FY27 and 127 GWh by FY30, driven by the country’s ambitious goal to source 50% of its primary energy from renewable sources by 2030.
At present, India relies heavily on imports to meet its demand of 15 GWh for domestic lithium-ion battery storage. Nonetheless, CareEdge Ratings forecasts that by FY27, this reliance on imports will drop to 20% despite the substantial rise in demand attributed to the development of large-scale integrated battery storage capacities.
This increase in demand is primarily fueled by the anticipated growth in electric vehicle (EV) adoption and the push towards decarbonizing electricity grids. This is supported by aggressive government targets and incentives at both the central and state levels, as detailed in the report.
Government initiatives include demand-side measures such as the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme and the Viability Gap Funding (VGF) scheme for Battery Energy Storage Systems (BESS), which are aimed at reducing the costs of EVs and BESS to boost demand.
The government aims for 30% EV penetration by 2030, measured as a percentage of annual sales. India has already assigned 40 GWh of integrated battery capacities under the Production Linked Incentive (PLI) scheme, with plans to allocate an additional 10 GWh soon.
Moreover, traditional battery manufacturers and several other companies in India are expected to establish battery capacities independently of the PLI scheme. Hardik Shah, Director at CareEdge Ratings, noted that the demand for lithium-ion battery storage in India is likely to experience a significant uptick, primarily driven by shifts towards EVs and the need for renewable energy storage.
As a result, India’s dependence on imported lithium-ion batteries is anticipated to sharply decrease to 20% by FY27, down from almost complete reliance currently, thanks to the emergence of large-scale integrated battery capacities within the country.
Shah also highlighted that the cost competitiveness of Indian manufacturers, especially in light of capacity expansions and the pricing policies of major global players, particularly Chinese manufacturers, will be crucial to observe.
