Battery parts may get a ₹9,000 crore push

The Union heavy industries ministry, which discussed the plan with industry executives at a meeting in the first week of November, will take up the matter with other ministries next, the people cited above said on the condition of anonymity.

"These are initial talks underway now. A stakeholder consultation was held recently. The consideration is for incentives of about ₹9,000 crore. Inter-ministerial consultations are likely to be held going ahead," one of the two people mentioned above said. Manufacturing of electrodes--battery components that carry electricity--is capital-intensive, the person said, adding local manufacturing requires research and development.

According to the second person cited above, Reliance Industries Ltd, Hindalco Ltd, Ola Electric Mobility, Epsilon Advance Chemicals, Amara Raja Energy & Mobility and Himadri Specialities were among 30-40 companies that attended the ministry's meeting with battery manufacturers, electrolyzer makers and companies planning giga factories. 

Queries sent to the companies as well as the ministries of heavy industries, new and renewable energy and finance remained unanswered.

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Batteries cost about 40% of an electric vehicle, and a push to make local components may bring EV prices on par with conventional fuel vehicles. Even though battery making has picked up since production-linked incentives for advanced chemistry cell (ACC) batteries were announced in 2021, manufacturers still depend heavily on imported components. The scheme, if finalized, would also support India's goal to become a hub for electrolyzers and green hydrogen.

"The key components in battery manufacturing are anode, cathode, adhesive, electrolyte, copper foil and aluminium foil. All these components would require government support for indigenous manufacturing at the initial stage. And these sectors, once developed, would cater to the export market as well, including the US and Europe, apart from the domestic market," said Debi Prasad Dash, president of the India Energy Storage Alliance (IESA).

Currently, China supplies most components, including anodes and cathodes, to battery makers worldwide, just as it dominates ACC batteries, Dash said. A PLI-like scheme for such items will also boost the Make In India initiative, he said.

Electrodes are the costliest components of a battery cell, with cathode and anode costing about 21% and 15% respectively, an industry report showed. According to the report by OMI Foundation, a mobility and transport think tank, raw materials for synthetic graphite that goes into anodes can be sourced from petroleum and steel. Since India is a major producer of petroleum products and steel, it has strong potential in the segment, said Pradeep Karuturi, head of Centre for Clean Mobility at the foundation who wrote the report 'EV-Ready India: Localizing Anode Production for a Greener Tomorrow'.

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Vikram Handa, managing director, Epsilon Advanced Materials said: “The government of India’s initiative to consider fiscal support for component manufacturing ecosystem in the ACC Sector like anode, cathode, electrolyte, and copper foil will prove as a significant step towards building a self-reliant and sustainable battery ecosystem. This will also attract investments, drive innovation, and reduce dependency on imports, and strengthen India’s role in the global battery supply chain. Localizing the production of anode and cathode materials is much essential for a sustainable, and efficient supply chain for the EV and ESS industries, while also mitigating geopolitical risks and developing talent."

“Anode manufacturing facility typically begins at an annual capacity of at least 20,000 tonnes, and the cost of 100,000 tonne annual capacity is about $1 billion. For cathode manufacturing, the cost would be somewhat higher," Karuturi of OMI Foundation said. India has the seventh largest reserve of natural graphite, out of which about 203.6 million tonnes is yet to be discovered, he said. While the country has immense potential to cater serve domestic anode manufacturing, the absence of large mines is an issue, he said.

Demand for anodes may rise in parallel with the increasing need for lithium-ion batteries, and it may reach 286 kilo tonne per annum by 2030, based on the Niti Aayog's projected lithium-ion battery demand of 260 GWh in India. "While it remains uncertain whether India will have the full 260 GWh of battery production capacity by 2030, this projection reflects the immense opportunity for anode production to meet domestic needs and potential export markets, underscoring the strategic importance of scaling up local anode manufacturing," the OMI report said.

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In 2021, the Union cabinet approved the ₹18,100 crore PLI scheme for ACC batteries to build manufacturing capacity of 50 GWh. So far, the government has awarded 40GWh capacity to Ola Electric Mobility, Rajesh Exports Ltd and Reliance Industries under the scheme.

Discussions with industry executives also come ahead of the phased manufacturing programme (PMP) for the government's EV subsidy scheme PM E-drive. This programme is set to enlist components used to manufacture EVs that have to be sourced indigenously, as well as components that are allowed to be imported, and the timeline before which their imports will be curbed.