New Delhi: India’s lithium-ion cell makers, which are used in electric vehicles (EVs) and battery storage systems, are seeking to narrow the price gap with Chinese rivals through local supplier development and taking advantage of key tax exemptions for companies in China expiring, potentially pushing up imported cell prices by about 9% over the next few months.
Industry executives said cell and component makers have, in recent weeks, stepped up discussions with the Union government seeking incentives for raw materials used in lithium-ion cell manufacturing to improve domestic cost competitiveness and build a local supplier base.
Development of local suppliers, government incentives for cell components and China's increasing export taxes can all help narrow the anticipated 20-30% price gap with Chinese lithium batteries, experts and industry executives suggest.
Efforts to narrow prices are accelerating, as over the next 12 months, battery manufacturing lines at several companies, including Exide Industries, Amara Raja Energy, Agratas, and Ola Electric, are expected to scale up production. This also comes at a time when the import bill of lithium-ion cells has come into the spotlight amid the West Asia war.
Lithium-ion cell imports jumped 56% in fiscal year 2026 to $4.6 billion, as total electric vehicle sales in the country grew to more than 2.4 million units in the same period, highlighting growing concerns about the sector's reliance on imports. Over two-thirds of imports come from China, which dominates the global EV supply chain through companies like BYD, CATL and SVOLT.
- China's VAT expiry could raise the cost of imported cells by 9%.
- India's lithium-ion imports surged 56% to $4.6 billion in FY26.
- Chinese suppliers undercut Indian rivals on cell components by up to 40%.
- The government's ₹18,100 crore PLI scheme has yet to disburse any funds.
- Battery chemistry mastery remains China's deepest, hardest-to-replicate competitive advantage.
Pravin Saraf, chief executive at Exide Energy Solutions Ltd, told analysts and investors during a 6 May earnings call that developing a local supplier base can help bridge the price gap with imported Chinese batteries.
The China tax factor
“For the imported cells (from China) today, there is a 3% increase in the VAT (value-added tax) due to the VAT structure already implemented. And by January next year, it will be an additional 6%. So, an overall 9% increase will happen. So, this will also help us,” Saraf added.
The government held two stakeholder consultations on a new scheme to support indigenous manufacturing of battery components, one in April and one in May, said two persons aware of the matter. “The discussion over these consultations largely revolved around whether the government would give incentives for the capex or opex of battery projects,” said this person.
Capex refers to upfront capital expenditure required to set up manufacturing plants, while opex is operational expenditure to keep them running.
“India needs stronger domestic capability in cathode active materials, anode materials, electrolytes, separators, foils, cell equipment, battery-grade chemicals and testing infrastructure. A practical next step would be a Battery Component and Materials Mission linked to actual demand from e-buses, grid-scale BESS, data centres and EV fleets,” Alekhya Dutta, director in the energy and renewables division at Delhi-based think tank The Energy and Resources Institute (Teri), said.
He added that to improve execution, workforce skilling is crucial in the battery and energy storage industry, as the machinery used in these manufacturing plants is highly technical.
Industry rallies, govt sops
Unlike past attempts to roll out targeted schemes for cell component suppliers, Industry players note that a series of developments, such as the West Asia war and an increase in Chinese cell prices, have added urgency to the efforts now, which are expected to materialise.
Bhavish Aggarwal, chairperson and managing director at Ola Electric, which has commissioned a 6GWh lithium-ion cell-making plant, said that there is momentum within the government to localise the EV supply chain.
“The clarity in the policy stakeholders is very clear that we will have to very quickly accelerate domestication of the battery supply chain,” Aggaral said during the company's earnings call on Wednesday.
Vikram Handa, managing director at Epsilon Advanced Materials Pvt. Ltd, a battery material maker, told Mint that discussions between the industry and government are accelerating to ensure that the supplier ecosystem for these cells is also localised.
“Chinese suppliers are able to offer cell components at 25-40% cheaper prices compared to other countries, including India. We will have to address this cost disadvantage to ensure that Indian cells are cost-competitive,” Handa said.
For an electric vehicle, lithium-ion cells are the most critical part. These cells are assembled into a battery pack based on a vehicle's requirements, collectively known as the battery. These batteries account for more than a third of an EV’s cost, which is typically higher than that of an internal combustion engine (ICE) vehicle, owing to import dependence.
The government has tried to localize the battery supply chain by incentivising cell makers through the ₹18,100 crore production-linked incentive (PLI) scheme, but has failed to disburse any funds due to delays in setting up plants by Reliance Industries, Ola Electric, and Rajesh Exports. One of the reasons cited by industry players has been the delay in sourcing equipment from China, which controls most of the supply chain.
Queries sent to ministry of heavy industries, Exide, Amara Raja, Ola Electric, Reliance, Agratas, and Rajesh Exports remained unanswered till press time.
Chemistry remains a wall
Experts note that a challenge for incentivising the supply chain is the lack of local chemistry development of these cells. Battery chemistries include nickel manganese cobalt (NMC) and lithium iron phosphate (LFP), which determine the core performance metrics and the raw materials required for these cells.
“The chemistry of lithium-ion cells has been developed and mastered by Chinese companies, which is difficult to recreate unless there are heavy investments in research and development. We can try and localise some components, but the biggest value will come from these chemistries,” Ashim Sharma, senior partner and business unit head at Nomura Research Institute (NRI) Consulting and Solutions, India.