India faces a massive lithium-ion battery shortage, with demand expected to hit 210 GWh by 2030 against currently limited domestic capacity. To bridge this gap, Amara Raja and Exide are investing a combined ₹16,000 crore into new gigafactories. Investors should monitor how this heavy capital spending impacts short-term profit margins and balance sheets as these traditional leaders pivot to electric vehicle energy.
What Happened
India is facing a critical shortage of lithium-ion batteries, which are essential for electric vehicles and energy storage. While government projections estimate an annual demand of 210 GWh by 2030, the country currently produces only a small fraction of this, at 1.4 GWh. To address this supply gap and reduce reliance on imports—which cost the country over ₹37,600 crore in the eleven months leading to February FY26—industry leaders Amara Raja Energy & Storage and Exide Industries are spending ₹16,000 crore to build local manufacturing capacity.
The Battery Supply Gap
The push to build local factories is driven by the government's Production Linked Incentive (PLI) scheme, which allocated ₹18,100 crore to support Advanced Chemistry Cell manufacturing. Despite this, domestic production is still far behind the target of 50 GWh. India’s heavy reliance on imported battery cells makes the industry vulnerable to global price fluctuations and supply chain issues. By building local plants, these companies aim to secure their supply chains and gain from the expected surge in demand.
Amara Raja and Exide: Different Approaches
Amara Raja is taking a large-scale approach with a ₹9,500 crore investment at its Telangana Giga Corridor. The company plans to reach a 16 GWh manufacturing capacity by FY30. A key part of its strategy involves focusing on Battery Energy Storage Systems (BESS), in addition to EV cells. Its first phase, a 2 GWh line, is expected to start commercial production by Q2FY28.
Exide Industries has committed ₹6,000–6,500 crore to its venture, Exide Energy. The company is setting up a 6 GWh plant with facilities in Bengaluru and Gujarat. Exide is focusing on specific technologies for different vehicle types, using cylindrical cells for two-wheelers and prismatic cells for four-wheelers and buses. Notably, Exide has secured technology support from SVOLT and a partnership with Hyundai-Kia, which may help it compete with imported batteries.
The Financial Impact of Heavy Expansion
Building gigafactories is a capital-intensive process that pressures company financials. Amara Raja has already seen a dip in operating profit (EBITDA) due to the expenses involved in ramping up its new energy segment. While the segment is growing—contributing 8% of revenue in Q4FY26—the massive spending required for new plants can create short-term margin pressure. Exide has reported more stable revenue and profit growth so far, but the success of these investments will depend on whether they can eventually produce batteries at a cost lower than or equal to imported ones. Historically, Amara Raja has shown higher capital efficiency metrics like Return on Equity compared to Exide, but the market currently values its stock at a premium, which investors should keep in mind.
What Investors Should Track
For investors, the most critical factors to watch are project execution timelines and the ability of these companies to manage costs. Any delays in commissioning these plants could affect future revenue growth. Furthermore, as these companies transition from lead-acid batteries to lithium-ion, investors should monitor profit margins, as new energy businesses often operate on different cost structures than traditional battery manufacturing. Finally, tracking the actual utilization of the new manufacturing capacity once it goes live will be essential to see if demand matches the companies' optimistic projections.