Whalesbook
Why India is Prioritizing Domestic Batteries
India's new Approved List of Battery Manufacturers (ALBM) marks a significant shift in its energy strategy. The policy aims not just to increase domestic production but also to create a buffer against global supply chain issues and dependence on other countries, especially for critical minerals from China. The ALBM will act as a key directive, guiding government projects to buy from local makers. This is a vital step toward energy independence and achieving India's goal of becoming a developed economy by 2047.
Lessons Learned from Solar Policy
This ALBM policy closely follows India's successful solar sector strategy. By naming specific suppliers for government energy storage projects, India aims to ensure steady demand for local manufacturers. This helps reduce the risks of relying heavily on imported battery components. The move is especially important because China dominates global battery cell manufacturing, controlling about 85% of production and critical mineral processing. The ALBM is designed to build India's own capabilities and strengthen its energy security.
The 'India Battery Vision 2047' Goals
The ALBM is a key part of the 'India Battery Vision 2047,' a long-term plan led by the ministries of heavy industries and power. This vision covers the full battery lifecycle, from sourcing minerals like lithium, cobalt, and nickel, to making cells, using them in electric vehicles (EVs) and for grid storage, and finally recycling them. The plan aims to develop 47 gigawatts (GW) of battery storage capacity, needing an estimated $38 billion investment. By 2047, India targets a total battery storage capacity of nearly 3 terawatt-hours (TWh).
Global Battery Market Growth and Competition
The global market for battery energy storage systems is set to grow rapidly, from an estimated $50.81 billion in 2025 to $105.96 billion by 2030. Global demand for lithium-ion batteries is forecast to hit around 4,700 GWh by 2030, requiring 120 to 150 new factories worldwide. While India is implementing supportive policies, it faces strong competition. Established manufacturers in China, South Korea, and Japan, along with companies in Southeast Asia, have advantages in technology, scale, and supply chains. India's later start and the high costs of cell manufacturing make it challenging to compete on price and technology.
Securing Essential Minerals
India's transition to clean energy is hampered by its heavy reliance on imported critical minerals like lithium, cobalt, and nickel, essential for batteries. This dependence creates risks from supply chain disruptions, price swings, and geopolitical tensions, particularly with China's significant role in processing these minerals. China's recent export controls on lithium-ion components underscore these vulnerabilities. To counter this, India has formed KABIL (Khanij Bidesh India Limited) to secure supplies through government-to-government deals and overseas mining acquisitions. A clear strategy for mining, processing, and refining critical minerals is crucial.
Challenges in Building Local Capacity
Despite its goals, India's battery manufacturing plans face major hurdles. The Advanced Chemistry Cell (ACC) Production Linked Incentive (PLI) scheme, launched in October 2021 with a budget of ₹18,100 crore to build 50 GWh of capacity, has progressed slowly. By late 2025, only 2.8% of the planned capacity was operational. Key companies like Reliance New Energy and Ola Electric show large gaps between awarded capacity and what's built. Importantly, no company has yet claimed PLI incentives, suggesting delays in meeting domestic value addition targets. India's manufacturing sector has seen slow growth, with its GDP share flat for ten years. The high costs and complexity of battery cell manufacturing, plus ongoing reliance on imported parts and technology, make building a competitive local industry a tough challenge.
Looking Ahead
India's success in battery manufacturing depends on overcoming these implementation issues. Continued government support and significant private investment will be key to meeting its capacity targets. While lithium-ion is the standard, newer technologies like Lithium Iron Phosphate (LFP) and Lithium Manganese Oxide (LMO) batteries, which can be cheaper, safer, and use different raw materials, might become important. For India to compete globally, it must move beyond simply assembling products to truly localize technology and manufacturing across the entire battery supply chain, secure mineral resources, and develop a skilled workforce.