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India needs investments to the tune of Rs 33,750 crore to achieve the government’s production-linked target of setting up 50 GWh of lithium-ion cell and battery manufacturing plants, according to a study.
The country requires up to 903 GWh of energy storage to decarbonise its mobility and power sectors by 2030, and lithium-ion batteries will meet the majority of this demand, an independent study released on Tuesday by the Council on Energy, Environment and Water (CEEW) said.
“India needs investments worth up to Rs 33,750 crore (USD 4.5 billion*) to achieve the government PLI target of setting up 50 GWh of lithium-ion cell and battery manufacturing plants,” CEEW said in the study report.
CEEW, however, noted that at the time of writing the report, the conversion rate was taken as Rs 75 per US dollar.
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The CEEW study ‘How can India indigenise lithium-ion battery manufacturing?’ calculates the material and financial requirements and offers a blueprint for the domestic strategy as India’s demand is expected to increase significantly.
Earlier this month, the government announced that 5.9 million tonnes of lithium reserves were found, for the first time in the country, in the Reasi district of Jammu & Kashmir.
Lithium is a non-ferrous metal and is one of the key components in electric vehicle batteries.
India’s electric vehicle market is expected to hit annual sales of 1-crore units by 2030, according to the Economic Survey 2022-23.
As per industry estimates, the total EV sales in India stood at 10-lakh units in 2022.
The analysis, as per CEEW, is based on the minimum manufacturing plant capacity (5GWh) allocated under the Production-Linked Incentive (PLI) scheme.
“For a green future, lithium will be as important as oil and gas are today. It’s in India’s strategic interest to secure not just the mineral, but also set up the required cell and battery manufacturing systems within the country,” said Rishabh Jain, Senior Programme Lead, CEEW.
It will reduce India’s imports in the long-run, and power its grid and EV transition, he said.
To scale up domestic lithium-ion manufacturing, India should step up R&D investments, focus on battery cell component manufacturing and reducing material costs, and support recycling to reduce the need for new materials, he said.
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To fulfil the overall battery demand, India will need 969-1,452 kilotonnes of anode, cathode, and electrolyte material (the components for a battery) between 2022 and 2030. This requires the country to prioritise other energy storage technologies as well, according to the study report.
The CEEW study recommends focusing on the strategic sourcing of critical minerals and pushing for research, development and demonstration in all technologies to retain competitiveness.
At the same time, reducing the cost of manufacturing batteries by innovating and updating manufacturing processes, and making policy changes to lower the cost of cell components are important, it said.
Development and deployment of batteries will have far-reaching impacts on India’s energy transition journey. Currently, India is import-dependent but the government has already started mobilising resources to indigenise battery cell manufacturing, said Dhruv Warrior, Research Analyst.
“The focus on mineral processing and component manufacturing are, however, limited. The study estimates that the share of upstream component manufacturing and material processing can be as high as 61 per cent.
Going forward, India must develop its capabilities to build skills, technology know-how and infrastructure to indigenise this part of the value chain too,” said Warrior.
