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Anika Chhillar, “Powering Ahead: The Future of EV Battery Manufacturing in India,” ORF Occasional Paper No. 512, Observer Research Foundation, December 2025.
Electric Vehicles (EVs) will play a critical role in driving global transitions away from fossil fuels in the transport sector. In India, EV sales are gaining momentum, crossing the 2-million mark for the first time in 2024—a growth of 24 percent from 2023.[1] In the same period, EV sales outpaced overall car market growth by 5 percent.[2] With the demand for passenger vehicles projected to grow 4.6 times and cargo vehicles 6.5 times by 2070, India faces a massive challenge in electrifying its fleet of vehicles.[3] At the same time, however, the situation presents enormous opportunities. The transition to EVs can bolster local value addition and create job opportunities. For this to happen, India must endeavour to indigenise battery manufacturing, as battery cost is a key factor in EV pricing, constituting up to 40 percent of the vehicle price.[4]
Despite a notable uptick in EV sales, local EV battery manufacturing has been slow to pick up pace. India largely imports lithium-ion cells and converts them into battery packs domestically, using low-value-added and labour-intensive processes.[5] The slow pace of growth is due to the capital-intensive and technologically complex nature of battery manufacturing. The process involves many steps, with varying degrees of automation and lead time. In recent years, the Indian government has given a policy push to the EV industry through the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, which incentivises EV demand, as well as the Production Linked Incentive Scheme for Advanced Chemistry Cell (PLI-ACC), a subsidy programme for battery manufacturers based on value addition and commercial sales.
A number of industry players in India have committed to investing in battery manufacturing, with plans for large-scale factories across multiple states. This paper analyses industry trends relating to planned investments and capacity, technology transfers, and the extent of government support received by manufacturers. The paper concludes by offering policy recommendations aimed at strengthening the domestic battery industry and supporting the transition to EVs.
The EV battery value chain encompasses a series of complex stages, from processing raw minerals to manufacturing key components and their integration into battery cells and packs. An overview of the value chain is illustrated in Figure 1. The cell manufacturing process is widely recognised as the most value-adding stage due to its technical complexity. The individual cells are then integrated into battery packs and battery management systems, making them ready for use in powering electric vehicles.
Until recently, India’s participation in the EV battery value chain was limited, and there was an over-reliance on imports, leading to supply chain risks and higher prices for EVs.[6] The imposition of tariffs between the United States (US) and China has slowed down cargo movement, causing an expected 30-percent rise in freight rates.[7] This directly affects battery manufacturers in India, who rely on imports from China not only for battery cells but also for critical inputs, including raw materials.
The recent supply disruptions represent India’s structural vulnerability, which the government has sought to address through initiatives such as FAME and PLI-ACC. India has introduced policies on both the demand side, such as FAME in 2015, and the supply side, such as PLI-ACC in 2021. Under the two phases of FAME and the recent PM E-DRIVE schemes, incentives are provided to buyers of electric vehicles in the form of an upfront reduction in the purchase price of EVs. The PLI-ACC aims to drive the indigenisation of the battery value chain, mandating that companies based in India achieve 60 percent domestic value addition in manufactured cells within five years. Subsidies under PLI-ACC are disbursed to manufacturers based on their levels of domestic value addition and commercial sales. Following the policy push by the government, many industry players have announced investments in the EV battery industry, marking the localisation of the battery value chain in India, particularly in pack assembly and cell manufacturing processes (see Table 2).
Figure 1: The EV Battery Value Chain
Source: Elsevier[8]
Table 1 presents a comparative review of estimated capital expenditures associated with establishing a 5 GWh EV battery manufacturing facility in India. The wide range of capital costs across firms highlights the uncertainty and variability in India’s battery manufacturing landscape. In contrast, manufacturing in China, the world’s current battery leader, is estimated to be in the range of US$55 million per GWh (~INR457 crore) and US$72 million per GWh (~ INR625 crore).[9] These costs are some of the lowest in the world and were achieved through consistent government support. Between 2009 and 2023, the Chinese government extended US$230.9 billion in support to the EV industry.[10] This support tripled between 2018 and 2020 and has continued to rise since 2021.[11] The subsidies have enabled the growth of the EV industry by helping firms sustain themselves and build economies of scale. Vertical integration also plays an important role in reducing costs. China controls 90 percent of global cathode and 97 percent of anode production, giving it a significant upstream advantage.[12] Original equipment manufacturers (OEMs) in China have also adopted a vertically integrated model, where leading EV automakers are cutting costs through in-house component manufacturing.[13]
Table 1: Estimated Capital Expenditure of a 5 GWh Battery Manufacturing Facility in India
| Source | Estimated Capital Expenditure (INR crore) | Estimated per GWh Expenditure (INR crore) |
| CEEW[14] | 2,437-3,375 | 487-675 |
| IEA [15] | 2,172-6,516 | 434 - 1,303 |
| Niti Aayog [16] | 4,980 | 996 |
As India seeks to close the cost and capacity gap with global EV leaders, the role of large-scale production facilities, or gigafactories, will become crucial. The next section examines the trends, strategies, and costs shaping these shifts.
The deployment of gigafactories in India has increased in recent years, and several players have committed to investing in the industry. Reliance Industries Ltd has positioned itself among the largest battery manufacturers, with an annual capacity of 30 GWh and investments of INR7,500 crore.[17] Agratas Energy Storage, a global battery business within the Tata group, has set up a 20 GWh plant in Sanand, Gujarat.[18] TDSG, a joint venture of Toshiba Corporation, Denso Corporation, and Suzuki Motor Corporation, has established a plant of 20 GWh capacity in Gujarat.[19]
Several Indian companies, such as OLA Electric, Exide Energy, and Amara Raja, are emerging as players in the battery manufacturing landscape. OLA Electric is building a gigafactory with an initial capacity of 5 GWh and plans to scale it up to 20 GWh by 2026.[20] An analysis of the industry reveals challenges such as varying capital expenditure costs, heavy reliance on technology transfers, particularly from China, uncertain subsidy regimes, and a fragmented policy environment.
While the investment pipeline is robust, a closer examination reveals significant variation in capital expenditure (CapEx) per GWh across manufacturers, as presented in Table 2. Reliance New Energy and TDSG have some of the lowest per GWh investment costs at INR 250 crore and INR 365 crore, respectively, while Exide Energy Solutions reports a higher per GWh investment of INR 500 crore. Other manufacturers have per GWh costs ranging from INR 600 crore to INR 650 crore. Higher CapEx signifies higher battery prices, reduced cost competitiveness, and a longer payback period. For smaller and new market entrants, it also poses barriers to securing affordable capital.
Table 2: Notable Players in Battery Manufacturing in India
| Company | Location (State) | Capacity (GWh) | Planned Investment (INR crore) | Per GWh Investment (INR crore) * |
| Exide Energy Solutions Limited[21] | Karnataka | 12 | 6,000 | 500 |
| Amara Raja[22] | Telangana | 16 | 9,500 | 600 |
| Agratas Energy Storage (Tata)[23] | Gujarat | 20 | 13,000 | 650 |
| Reliance New Energy Storage Ltd[24] | Gujarat | 30 | 7,500 | 250 |
| TDSG[25] | Gujarat | 20 | 7,300 | 365 |
Source: Author’s compilation based on multiple news reports, as cited.
*Based on the author’s calculations
The financing problem is compounded by the lack of long-term offtake agreements in India’s battery sector. Offtake agreements, which are commitments from buyers to purchase the product, are an essential financing tool for operationalising a large-scale project. Amara Raja has signed an offtake agreement with the manufacturer Ather Energy to supply EV batteries that will be produced at its Telangana plant.[26] Such agreements remain uncommon across India’s battery industry, especially compared to markets such as North America, where they are central to the business model. Without such agreements, banks are unlikely to offer competitive financing terms because they seek to minimise their exposure to risk, especially in new technologies.[27]
Despite these challenges, a positive trend emerges. Capital costs have fallen over the past few years and are expected to continue to decline substantially over the next decade.[28] The anticipated continued reduction in costs is important for the economic viability of many projects, both in the near and longer term. As capital efficiency improves, Indian firms may find it easier to scale operations and attract investments.
A significant number of Indian companies have entered into technology transfer agreements with established battery manufacturers, particularly from China. Exide Energy Solutions, for instance, has signed a technology transfer agreement with SVOLT, a China-based high-tech lithium-ion battery producer. Under this arrangement, Exide will have the irrevocable right to use and commercialise SVOLT’s technology and know-how for battery manufacturing.[29] Amara Raja has entered into a similar agreement with Gotion-InoBat-Batteries, a unit of China-based Gotion High Tech Company, to access its technology.[30] Agreements such as these enable Indian manufacturers to benefit from their partner’s technology, expertise in setting up manufacturing units, operational scale, and, most importantly, integration into their partner’s global supply chain networks. For India, however, its heavy reliance on Chinese technology carries strategic and geopolitical risks.
China enjoys a dominant position in the global EV battery supply chain, particularly owing to its extensive research and development (R&D) in battery technology. Leading Chinese firms have driven technological advances by increasing energy density, fast-charging capabilities, and enabling cost reductions.[31] The intensity of battery research in China outpaces that of any other country, supported as it is by substantial government funding—such as the 6 billion Yuan (nearly US$860 million) provided to major companies such as BYD and CATL.[32] However, close integration with Chinese companies can potentially create strategic vulnerabilities. China has become restrictive in sharing EV battery technology and exporting critical minerals, as it seeks to consolidate its dominance in the sector. Earlier this year, the Chinese government announced plans to curb the export of technologies essential for the growth of the EV industry, including those required for the mining of critical minerals[33] and producing cathodes.[34]
Given these developments, it is important to reassess the terms and long-term implications of technology transfer agreements with Chinese partners. A rigorous and transparent cost-benefit analysis of such agreements is essential for informed policymaking. If manufacturing costs in India rise significantly without access to Chinese technology, then the rationale for de-risking becomes more complex. Cost competitiveness is crucial for the industry’s growth. On the other hand, if partnerships with alternative suppliers offer comparable cost advantages, Indian manufacturers may have viable alternatives.
Further, investing in new chemistries such as Sodium Ion Batteries (SIB) and Solid-State Batteries (SSB) has the potential to reduce dependence.[35] SIB and SSB chemistries require fewer critical minerals and replace lithium with sodium, thereby requiring much less complex supply chains.[36] The technology required for these batteries is still nascent,[37] but India’s proactive investment and R&D focus in these chemistries can position the country as a leader in sustainable and secure energy storage in the coming decades.
While some Indian companies are beginning to develop in-house R&D capabilities and accumulate intellectual property, such as OLA Electric and Agratas Energy, the broader ecosystem for battery research and commercialisation remains fragmented. Agratas Energy Storage operates an R&D centre in the United Kingdom, focusing on developing next-generation battery technology.[38] Meanwhile, OLA Electric has created the ‘Bharat Cell’, an indigenous 4680 cell technology, developed entirely without importing technology and securing over 70 patents in the process.[39] This approach involves substantial investments and higher R&D costs compared to those associated with technology transfer agreements. In India, public research institutions and academic bodies dominate early-stage battery R&D, with limited translation of research into commercial applications.[40] In contrast, industry research focuses on the commercial deployment of technology.[41] The disconnect between research and industry has created a gap where high-potential technology stagnates due to an absence of funding, infrastructure, and limited technology transfer pathways.[42]
In 2023, the Anusandhan National Research Foundation (ANRF) was established following the passage of the ANRF Act to encourage collaboration between academia, industry, and government by providing financial support to high-priority research areas such as battery storage.[43] However, India’s overall gross expenditure on R&D (GERD) in 2023-24 was 0.64 percent of GDP, of which 36 percent was contributed by the private sector, unlike countries such as China and the United States, where the private sector contributes over 70 percent.[44] This skew hampers research funding and the commercialisation of new technology in India.
Despite the government’s ambitions to localise battery manufacturing and reduce dependence on imports, the current subsidy regime is characterised by disbursement delays, fragmentation, and a skewness towards a few large players. The flagship programme, the PLI-ACC scheme, was designed to attract investments in the industry—while it has succeeded in doing so, various challenges hinder its effectiveness. At the same time, state-level incentives vary widely in their scope and depth. The following paragraphs examine the structural challenges in the subsidy landscape and how they impact the growth of India’s battery ecosystem.
1. Hurdles in the PLI-ACC Scheme
The PLI-ACC scheme has played a role in attracting investment to the industry, with a total of 35 GWh allocated so far, as shown in Table 3. Three companies were selected under the PLI-ACC scheme, and the incentives allocated to them are based on their proposed manufacturing capacities. OLA Electric became the first firm to benefit from the PLI scheme when it was awarded INR73.7 crore in March 2025.[45] However, the disbursements under the scheme have been slow and contingent on strict conditions.[46] Many beneficiaries have asked for extensions due to supply chain disruptions as Indian battery firms remain reliant on China for key components as well as technology.[47] The scheme has also run into implementation challenges. As of early 2025, none of the beneficiaries had met the December 2024 milestones, resulting in no disbursement and a reduction in the scheme’s budgetary allocation from INR250 crore to INR15.42 crore.[48] Long gestation periods and continued reliance on imports have contributed to these challenges.
Table 3: PLI-ACC Beneficiaries and Allocated Incentives
| Company | Total Allocated Capacity (GWh) | Estimated PLI Incentive (INR crore) |
| Reliance New Energy Storage Ltd | 10[49] | 3,620[50] |
| Ola Cell Technologies | 20[51] | 7,240* |
| ACC Energy Storage (Rajesh Exports) | 5[52] | 1,810* |
Source: Author’s own, based on various sources, as cited.
*Note: Calculation carried out by the author based on the subsidy capacity set by the government of INR362 crore per GWh in the PLI-ACC document.[53]
Further, the scheme’s concentration of support to only three large players limits its impact on the broader Indian battery industry. By excluding smaller and innovative players, the scheme restricts the diffusion of benefits such as cost reduction.
2. State-level Incentives and Industrial Support
State governments, rather than the central government, have a leading role to play in deploying support to battery firms in India. This is because Central schemes, such as the PLI-ACC, are extended to a few firms and are subject to bureaucratic hurdles and disbursement delays. The states receiving the greatest government support for their battery ecosystems are Gujarat, Karnataka, Telangana, and Tamil Nadu. Broadly, four forms of subsidy support from the state government are extended to the battery industry: capital investment subsidy, land and utility subsidy, interest subsidy, and duty exemptions, as shown in Table 4.
Table 4: State-level Incentives to Promote Battery Manufacturing
| State | Capital Investment Subsidy | Land and Utility Subsidy | Interest Subsidy | Tax and Duty Exemptions |
| Gujarat | ||||
| Karnataka | ||||
| Telangana | ||||
| Tamil Nadu |
Source: Author’s own, based on various official reports
States offer substantial capital investment subsidies. Gujarat offers subsidies, including interest subsidies of up to 7 percent on loans, 100 percent reimbursement of SGST paid on capital goods over 20 years, and substantial net SGST reimbursements, aimed at promoting large-scale investments in manufacturing in the state.[54] Karnataka, Tamil Nadu, and Telangana offer a 20 percent investment subsidy, with some states capping the subsidy level. By offsetting a portion of the initial investment, these subsidies play a role in lowering the barrier to entry for firms into capital-intensive sectors such as battery manufacturing. Another subsidy that is important in offsetting costs is land subsidies.
Land acquisition in India is a lengthy task that requires regulatory approvals, and the process can often stretch timelines and cause project costs to go up. In 2021, 22 percent of power projects were delayed due to problems in land acquisition.[55] Further, industrial land prices in India are significantly more expensive than their counterparts in other countries in Asia. Factory land in India is 25 percent more expensive than comparable land in Thailand.[56]
States such as Tamil Nadu and Gujarat have formulated a workaround for the problems of bureaucratic delays in acquisition and high prices by establishing industrial parks, such as those in Sanand and Dholera, and hefty land subsidies. Industrial parks allow firms to enjoy cheap rents, which are only a fraction of the land’s market value, and build big campuses and factories for their operations, as is required for battery production. Tamil Nadu has some of the most attractive land subsidies for battery manufacturers in the country; it offers a 20 percent subsidy on the cost of the land and a 50 percent subsidy if the factory is located in its southern districts.[57] Leading states have made progress in supporting battery manufacturing; however, India’s state-level industrial policy landscape remains highly fragmented. Without a clear national framework or template for state-level support, firms face unpredictability when choosing locations for their manufacturing units.
India’s battery gigafactories are showing signs of industrial and technological progress, but the sector continues to grapple with challenges such as cost disparities, reliance on foreign technology, financing uncertainties, and a fragmented policy environment. Addressing these challenges will be critical to ensure that the country can establish itself as a battery leader in an industry that is becoming consolidated[58] and is rapidly evolving technologically. The next section examines international experiences from France and Thailand to identify lessons that can inform India’s policy for the domestic battery industry.
The French government has played a central role in developing the EV industry through policies such as the France 2030 Plan and the European Battery Alliance. The France 2030 Plan includes EUR2.5 billion earmarked to decarbonise the transportation sector.[59] The plan also funds R&D projects and training programmes to upskill 70,000 people for battery jobs by 2030.[60] In 2023, the Government of France introduced tax credits for green energy projects ranging from 20 to 60 percent.[61] The European Battery Alliance, launched in 2017, aims to build a full and competitive EV value chain in Europe by coordinating investment and research activities. By 2022, 111 major battery projects across Europe were being planned, built or expanded, and the total investment in the value chain was equivalent to EUR 127 billion.[62]
Battery projects are funded through a hybrid of subsidies, private investments, and European Union support. Automotive Cells Company (ACC), a joint venture between the French company TotalEnergies, Mercedes-Benz, and Stellantis, has raised debt for three gigafactories across Europe, including one in France, with the help of private lenders as well as French public banks.[63] Institutions such as the European Investment Bank support the development of battery gigafactories and have invested EUR49 million in Verkor, a French battery startup.[64] Subsidies also play an important role in supporting gigafactories. Verkor received EUR650 million in funding from the France 2030 Plan.[65] ACC received EUR1.3 billion in financial support from French and German authorities.[66]
French companies have focused on deepening European integration in the technology sector. The formation of ACC enabled vertical integration; battery technology was introduced by TotalEnergies’ wholly owned subsidiary, Saft, while the other partners contributed production and automotive knowledge. Verkor has leveraged alliances with established European automotive companies for research as well as supply agreements. In 2021, Verkor and Renault agreed to develop and manufacture battery cells.[67] By 2023, the partnership had matured into a commercial supply partnership where Verkor would supply 12 GWh of batteries per year for Renault’s EVs.[68]
Lessons for India
France’s experience shows the value of a coordinated and well-funded plan for establishing a battery industry. Key lessons for India include:
In 2023, the government of Thailand allocated 24 billion Baht (approximately US$650 million) to subsidise the domestic manufacturing of battery cells.[69] The objective is to help manufacturers cut production costs, and, due to limited funds, it is offered on a “first-come, first-served” basis. The grant is contingent on the size of the plant and the specific energy capacity of the batteries. Gigafactories with a capacity under 8 GWh will be funded between THB400 and THB600 per kWh, and those with a capacity over 8 GWh will be funded between THB600 and THB800 per kWh.[70] Consumer subsidies for the purchase of vehicles and reductions in excise duty on imported EVs and battery components have encouraged the growth of the industry in Thailand.[71] Additionally, battery production for EVs will also receive up to eight years of corporate tax exemptions.[72]
Global and local players are investing heavily in Thailand’s EV battery sector. Major Chinese EV players have set up manufacturing units in Thailand with strong support from the government. Among them are BYD, which completed its Thailand plant construction in just 16 months,[73] and Sunwoda, which invested US$1 billion in a battery manufacturing plant in the country.[74] Korean automaker Hyundai has also invested US$28 million in EV battery assembly.[75] The battery ecosystem in Thailand is built on international cooperation. SVOLT Energy Technology (China) partnered with Thailand’s Banpu to establish a battery pack factory with advanced short-blade cell technology.[76] Automakers such as Toyota, Honda, Mercedes-Benz, and BMW are also investing in battery manufacturing in the Southeast Asian country.[77]
Lessons for India
Thailand demonstrates that clear, targeted incentives and an openness to global partnerships can help develop the domestic EV industry. Key lessons for India include:
India has begun to cultivate an ecosystem for battery manufacturing, with private investments and state support increasing in recent years. However, as industry players struggle to maintain timelines and face uncertain state support amid vulnerabilities arising from geopolitical developments, there is a need to recalibrate policy priorities. Policymakers may consider the following recommendations to make the battery ecosystem in India more robust and resilient:
India has several policies and missions to promote domestic battery manufacturing for EVs; however, it lacks a unified and comprehensive national battery strategy akin to France’s “France 2030 Plan”. Further, many of the policies targeting the EV battery industry are fragmented across ministries and state governments.[78] The central government should develop a battery sector roadmap spanning R&D, investment, workforce training, and supply chain targets. A stable and transparent policy framework would provide clarity and predictability for manufacturers and investors.
The following measures can be considered:
India’s reliance on Chinese battery technology, though practical, is still a strategic risk. Further, relying heavily on technology openness without adequately strengthening indigenous technology and firms can limit the country’s ability to leapfrog when windows of opportunity are created by disruptive technology. The need is to balance ongoing technology transfers with a push for local innovation.
At present, India’s EV battery landscape is marked by state-level disparities, with some states offering strong policy support while others lag behind. This creates an uneven playing field and leads to the geographic concentration of manufacturing hubs in a few states, rather than a more balanced regional development. Policymakers can consider:
India must strengthen its place in the global battery industry by investing in domestic manufacturing, skill development, and technological innovation. The way forward lies in leveraging strong policy support by coordinating state and central efforts and establishing long-term financial incentives. This will reduce import dependence and add value and competitiveness to India’s EV battery ecosystem.
Positioning India within the global EV battery industry requires a strategic reflection on the country’s industrial vulnerabilities in light of existing geopolitical tensions and international competition. Policymakers must ensure that domestic manufacturing capacity, technology partnerships, and policy frameworks align to address these vulnerabilities.
Government policies such as FAME and PLI-ACC have encouraged early investments, but the industry continues to face structural challenges: high and varied capital costs, technological dependence, and fragmented policy support. To overcome these challenges, several shifts in strategy and policy are required.
First, India must establish a cohesive national strategy that aligns various state policies and subsidies into a unified framework that spans all aspects of the supply chain, including workforce training and R&D. Second, the subsidy regime must be expanded to include a greater number and variety of firms, with state-driven industrial parks helping address land acquisition and infrastructure barriers. In parallel, India needs to diversify its technology partnerships and invest in a domestic R&D ecosystem. Finally, empowering states with technical support and harmonised incentive frameworks will ensure balanced regional development and reduce policy uncertainty.
Strengthening the battery industry in India is essential to securing the country’s green future. By building a competitive battery ecosystem, India can position itself as a global hub in the fast-changing and increasingly significant EV value chain.
Anika Chhillar is Research Assistant, Centre for Economy and Growth, ORF.
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[84] “State of Research and Development in Electric Vehicle Battery Technology”
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Anika Chhillar is a Research Assistant at the Centre for Economy and Growth, ORF New Delhi. Her work focuses on international trade and industrial policy ...
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