India is preparing a new incentive scheme worth approximately ₹12,000 crore to promote domestic manufacturing of critical battery components, marking the next phase of the country’s electric vehicle and energy storage ambitions. The proposed scheme is expected to complement the existing ₹18,100 crore Production Linked
Incentive (PLI) program for Advanced Chemistry Cell (ACC) battery manufacturing and address one of India’s biggest weaknesses in the EV value chain—dependence on imported battery materials and components.
Why India Needs a Battery Components Scheme
Over the last few years, India has focused heavily on attracting investments in battery cell manufacturing through the ACC PLI scheme. However, manufacturing battery cells alone does not create a self-reliant ecosystem if the underlying materials continue to be imported.
The government has identified several upstream components where India remains highly dependent on imports, including:
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Cathode Active Materials (CAM)
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Anode Active Materials (AAM)
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Electrolytes
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Copper Foil
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Battery Separators
These components account for a significant portion of battery manufacturing costs and are critical for achieving meaningful localization. The Ministry of Heavy Industries has already acknowledged the lack of domestic availability of CAM, AAM, electrolytes, and related materials as a major challenge for India’s battery industry.
What the Proposed ₹12,000 Crore Scheme Could Cover
According to reports, the new incentive framework is likely to provide financial support for manufacturing:
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Cathode Active Materials (CAM)
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Anode Active Materials (AAM)
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Electrolytes
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Copper Foil Separators
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Other advanced battery materials
Unlike previous schemes focused primarily on battery cell assembly, the new proposal is expected to encourage companies to establish complete supply chains within India rather than merely importing components and assembling them locally. Funding support may be linked to domestic value addition and supply chain development targets.
Complementing the Existing ACC PLI Scheme
India’s ACC Battery Storage PLI Scheme carries an outlay of ₹18,100 crore and aims to establish 50 GWh of domestic battery manufacturing capacity. While it has attracted investments from companies such as Ola Electric and Reliance, the development of upstream material manufacturing has lagged behind.
The proposed component incentive scheme could serve as the missing link by ensuring that future battery factories source a larger share of materials domestically, thereby increasing local value addition and reducing import dependence.
The Scale of Opportunity
Industry estimates suggest that India could require:
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More than 400,000 tonnes of Cathode Active Material (CAM)
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More than 200,000 tonnes of Anode Active Material (AAM)
by 2030 to support approximately 223 GWh of announced battery manufacturing capacity.
This demand is expected to be driven by:
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Electric passenger vehicles
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Electric two-wheelers
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Commercial EVs
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Grid-scale energy storage systems
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Renewable energy integration projects
As battery demand grows, the economic opportunity for localized component manufacturing could run into billions of dollars annually.
Reducing Dependence on China
One of the primary objectives of the scheme is to reduce India’s reliance on China-dominated battery supply chains.
Currently, China controls a substantial portion of the global battery materials ecosystem, including cathode materials, anode materials, copper foil production, and battery processing technologies. This dependence exposes Indian manufacturers to supply chain disruptions, geopolitical risks, and currency fluctuations.
By incentivizing domestic manufacturing, India aims to create a more resilient battery ecosystem while also attracting global battery material suppliers to set up facilities in the country.
Challenges Ahead
While the proposed scheme is a significant step forward, several challenges remain:
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Technology transfer and access to advanced manufacturing know-how
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Availability of critical minerals such as lithium, nickel, cobalt, and graphite
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Skilled workforce development
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High capital expenditure requirements
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Building globally competitive scale
Industry experts have repeatedly pointed out that battery localization requires not just cell manufacturing incentives but also support for raw materials, recycling, refining, and component manufacturing.
What This Means for India’s EV Industry
For automotive OEMs such as Tata Motors, Mahindra & Mahindra, Maruti Suzuki, Hyundai Motor India and emerging EV players, localized battery materials could eventually result in:
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Lower battery costs
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Reduced import dependence
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Improved supply chain security
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Faster EV adoption
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Enhanced export competitiveness
Given that batteries account for nearly 35-45% of an EV’s cost, strengthening domestic battery component manufacturing could play a crucial role in making electric vehicles more affordable for Indian consumers.
India’s ₹18,100 crore ACC PLI scheme was designed to create battery cell manufacturing capacity. The proposed ₹12,000 crore battery components incentive scheme could be the next logical step in building a fully integrated EV ecosystem.
If implemented effectively, the initiative could help India move beyond battery assembly and establish itself as a global hub for battery materials, components, and advanced energy storage technologies. As the EV market accelerates toward the end of this decade, localization of CAM, AAM, electrolytes, and separators may prove just as important as battery cell manufacturing itself.
