Can India become the next battery manufacturing hub?

This article is authored by Ankur Khaitan, managing director & CEO, TACC Limited.

For much of the past decade, the global battery industry has been synonymous with one country. China refines the overwhelming share of the world's lithium, controls the majority of cathode and anode capacity, and manufactures roughly four in five of the battery cells that power electric vehicles and grid storage today, according to the IEA's Global EV Outlook 2026. That concentration once looked like an efficient outcome of scale and cost. It now looks, to many governments and manufacturers, like a vulnerability. Trade restrictions, tariff disputes and export controls on materials such as graphite have pushed automakers, cell makers and policymakers across the US, Europe, Japan and South Korea to actively diversify their supply chains. The question this raises for India is whether it can move from being a promising alternative to becoming a dependable pillar of the world's battery manufacturing map.

Battery

Global battery demand has expanded rapidly this decade. The electric vehicle battery deployment at around 1.2 TWh in 2025, an increase of nearly 30 percent over 2024, and projects this could triple by 2030 depending on the policy scenario. Stationary storage is scaling even faster off a smaller base. The grid-scale battery storage is growing faster at roughly 48% year on year, and that pace is expected to continue.

On the supply side, global lithium ion cell manufacturing capacity stood at close to 6 TWh in 2025 and is on track to double by 2030. China accounts for around 85% of this installed capacity, a dominance built over two decades of consistent investment across mining, refining, materials and cell production. The rest of the world, principally North America, Europe and parts of Asia, is expanding rapidly but, much of that expansion still depends on Chinese equipment and technical expertise. So, the question the industry faces is not whether there will be enough batteries but the geographic concentration of that capacity.

Electric vehicles (EVs) remain the largest single driver of battery demand, accounting for more than 70% of global battery deployment in 2025, though this share is gradually declining as other applications scale. Energy storage systems are the fastest growing segment. Data shows annual ESS additions nearly doubling within two years, driven by falling battery costs, the need to firm up variable renewable generation, and a genuinely new source of demand: AI data centres, which increasingly require batteries for grid reliability and faster energisation. Consumer electronics, power tools, drones and robotics remain meaningful but comparatively steady contributors, unlikely to match the growth of EVs and ESS over the coming decade.

What is notable is how quickly ESS has moved from a niche application to a mainstream one. For India specifically, this matters because our country's more than 250 GW of installed renewable capacity increasingly needs storage to be dispatchable, which is why grid scale battery storage, alongside EVs, is likely to be the twin engine of domestic battery demand.

The gap between announced capacity and commissioned capacity is one of the more sobering features of this industry, and India is not exempt from it. Globally, announced lithium ion cell capacity comfortably exceeds current demand, and several analysts flag meaningful overcapacity risk in China through the late 2020s. In the US, ESS focused capacity is scaling quickly, helped by the retooling of several EV focused gigafactories toward LFP and storage applications.

In India, the picture is one of large ambition and slower execution. The government's Advanced Chemistry Cell Production Linked Incentive scheme, with an outlay of ₹18,100 crore, targeted 50 GWh of domestic cell manufacturing capacity. As of late 2025, only a fraction of that had been commissioned. This is a reminder that cell manufacturing is capital intensive, technically demanding and slow to scale even with strong policy support. The underlying demand signal remains real and growing: India's battery requirement is estimated to rise from roughly 28 GWh in 2025 to well over 200 GWh by 2030, a trajectory that should, over time, close the gap between announced and operating capacity.

India's case rests on a combination of factors that individually are not unique, but together are increasingly rare. We have a large and growing pool of engineering and process talent, a manufacturing cost base that remains competitive and a chemical and materials processing ecosystem, built over decades in sectors such as graphite electrodes, specialty chemicals and metals,

that can be redirected toward battery materials. India also has what few other alternative markets can offer: A large domestic market for EVs and energy storage in its own right, so capacity built here does not depend entirely on export demand to be viable.

This is not a case for India replacing China. China's scale, cost structure and two decades of accumulated process knowledge in cell, cathode and anode manufacturing remain formidable. India's opportunity is more specific: to build a credible, cost competitive, policy backed alternative source of supply, positioned as what much of the industry now calls a China plus one option rather than a wholesale replacement. A stable policy environment, growing renewable energy capacity that lowers the cost of power intensive processing, and a strategic geographic position between West Asia, Southeast Asia and western markets add further weight to that case.

India's battery industry is likely to develop in two broad phases. The first, already underway, is import substitution: building domestic cell and materials capacity to meet the country's own EV and energy storage demand, reduce near total dependence on imported cells and materials, and strengthen energy security. This phase does not require India to be the cheapest producer in the world. It requires India to be reliable, and to steadily improve cost competitiveness as scale builds.

The second phase, which will take longer, is export oriented participation in the global battery supply chain. Here, an important nuance is worth making explicit: battery components, and graphite anode material in particular, are likely to become export ready well before finished battery cells are. Global demand for non-Chinese anode supply, sharpened by recent trade actions in the US, is already creating commercial openings. Companies building anode capacity in India today, serving domestic cell manufacturers while also qualifying material for international customers, are effectively running both phases of this strategy in parallel.

The Government of India deserves credit for building a reasonably coherent policy architecture around this ambition. The ACC PLI scheme, the National Critical Mineral Mission with an outlay of ₹16,300 crore aimed at securing lithium, cobalt, nickel and graphite supply chains, PM E-Drive and the earlier FAME schemes supporting EV adoption, and a series of critical mineral partnerships and bilateral collaborations with resource rich countries together represent a serious and sustained commitment rather than a one-off announcement.

That said, there is more to do. Dedicated support for cell components, cathode and anode active materials, electrolytes and separators, where India currently has almost no domestic capacity, would do more to build a resilient supply chain than incentives for cell assembly alone. India should also formally classify synthetic graphite under its critical minerals framework, as the US has done, rather than treating it as a downstream processed product. Demand for synthetic graphite anode active material is significantly higher compared to natural graphite, given the stability and performance it offers, and bringing it within the critical minerals net would unlock the same fiscal and strategic support, including exploration incentives, duty exemptions and long-term offtake backing, that upstream lithium, cobalt, nickel and natural graphite already receive. Export incentives, deeper raw material security through offtake partnerships, continued technology collaboration with global players, and patient, long duration financing suited to capital intensive manufacturing would all help. Above all, policy stability over a ten-year horizon, rather than scheme by scheme extensions, would give investors the confidence to commit the capital this industry requires.

The world is not waiting for any single country to get this right. Supply chains are diversifying because governments and manufacturers have decided that concentration risk is no longer acceptable, and that shift will continue regardless of how quickly any one alternative market develops. India has a genuine, if not yet fully realised, opportunity to become one of the trusted partners in that diversified supply chain. Whether it does will depend less on any single policy announcement and more on sustained, coordinated execution across government, industry, technology providers and investors. India's advantage, if it is built well, will not lie only in assembling battery cells. It will lie in building a globally competitive materials ecosystem, from graphite anodes to critical mineral processing, that other countries want to buy from. That is a more durable form of leadership than capacity alone, and it remains well within India's reach.

(The views expressed are personal)

This article is authored by Ankur Khaitan, managing director & CEO, TACC Limited.