Indian battery manufacturers and industry stakeholders are seeking capital expenditure subsidies of up to 50% to develop a domestic battery component manufacturing ecosystem. The proposal comes as the government prepares a ₹12,000-crore incentive scheme for advanced chemistry cell (ACC) battery components, with the objective of reducing dependence on Chinese suppliers and improving the competitiveness of Indian manufacturers.
The proposed support would cover critical battery materials such as cathode active materials, anode active materials, electrolytes, separator films and copper foil. Industry representatives argue that Indian manufacturers face significantly higher investment and production costs than their Chinese competitors. The proposed scheme is currently under inter-ministerial consultation and is expected to complement the existing ₹18,100-crore production-linked incentive programme for battery-cell manufacturing.
Industry Wants Up to 50% Capital Subsidy
According to a report by Moneycontrol, industry stakeholders have proposed three models of government support to make domestic battery component manufacturing more competitive.
The proposals include:
- A 25% capital expenditure subsidy combined with operational expenditure incentives: Companies would receive assistance for setting up manufacturing facilities, along with additional incentives linked to production costs.
- Operational expenditure incentives alone: Manufacturers would receive financial support based on the components they produce, without a direct capital subsidy.
- A 50% capital expenditure subsidy: The government would provide capital support in proportion to investments made by eligible manufacturers.
Under the hybrid model, the proposed operational expenditure incentives range from 5% for nickel manganese cobalt (NMC) cathode materials to 18% for synthetic graphite anodes.
Under the operational expenditure-only proposal, incentives could range from 11% to 37%, depending on the component.
The industry also wants incentives linked to investment, domestic value addition, manufacturing capacity and actual sales. Such conditions could help ensure that government support goes towards establishing meaningful manufacturing capabilities rather than limited assembly or processing activities.
These are industry proposals, not approved government subsidy rates. The final incentive structure will depend on the government’s assessment and approval process.
Government Preparing a ₹12,000-Crore Battery Component Scheme
The proposed ₹12,000-crore scheme is intended to address a major gap in India’s battery supply chain.
The Ministry of Heavy Industries already operates the ₹18,100-crore production-linked incentive scheme for advanced chemistry cell battery manufacturing. However, building battery-cell factories alone does not create a complete domestic supply chain.
Battery manufacturers also need reliable supplies of specialised materials, including cathodes, anodes, electrolytes and separators. A significant share of these materials is currently sourced from overseas suppliers, particularly China.
The new programme is expected to support manufacturing across five major component categories:
| Battery component | Role in battery manufacturing |
|---|---|
| Cathode active material (CAM) | Determines important battery characteristics, including energy density and performance |
| Anode active material (AAM) | Stores and releases lithium ions during charging and discharging |
| Electrolytes | Enable the movement of ions between electrodes |
| Separator film | Prevents direct contact between electrodes while allowing ion movement |
| Copper foil | Acts as a current collector, primarily for the anode |
The proposed scheme is still under inter-ministerial consultation. It should therefore not be treated as a final approved policy or as an open subsidy programme for manufacturers.
Indian Manufacturers Face a Significant Cost Disadvantage Against China
The main reason behind the industry’s demand for substantial government support is the cost advantage enjoyed by Chinese manufacturers.
A report titled Accelerating India’s ACC Component Manufacturing Ecosystem, prepared by the Net-Zero Energy Transition Association (NETRA) in collaboration with IIT Madras, industry bodies and battery-sector companies, highlights the scale of the challenge.
According to the report, domestic battery component production costs are estimated to be 18% to 61% higher than the landed cost of Chinese supplies, depending on the component.
The estimated cost differences include:
| Battery component | Estimated Indian cost disadvantage |
|---|---|
| Lithium iron phosphate (LFP) cathode material | 47% |
| Nickel manganese cobalt (NMC) cathode material | 18% |
| Natural graphite anode | 51% |
| Synthetic graphite anode | 61% |
| Electrolytes | 37% |
| Separators | 49% |
| Copper foil | 27% |
The report also estimates that capital expenditure for setting up cathode active material manufacturing facilities in India is 235% higher than in China. For anode active material facilities, the estimated gap is 425%.
These differences make it difficult for Indian companies to compete with established Chinese suppliers, particularly when domestic manufacturers are trying to build facilities and scale production for the first time.
India Has a Large Battery Manufacturing Capacity Gap
India’s expected battery demand is increasing as electric vehicles, renewable energy storage and other battery-powered applications expand.
The NETRA report projects that domestic battery demand could rise from 33 GWh in 2025 to 236 GWh by 2032 and nearly 600 GWh by 2037.
However, India’s existing manufacturing capacity for important battery materials remains limited.
| Component | Existing Indian capacity | Projected requirement by 2032 |
|---|---|---|
| Cathode active materials | 7.98 ktpa | 283–472 ktpa |
| Anode active materials | 0.8 ktpa | 236 ktpa |
Note: ktpa refers to thousand tonnes per annum. Figures are based on the estimates reported by Moneycontrol from the NETRA study.
The gap is particularly significant for anode materials. Existing identified capacity of 0.8 ktpa is substantially below the projected requirement of 236 ktpa by 2032.
For cathode materials, existing capacity is also far below the projected requirement.
The shortfall indicates that India’s battery manufacturing ambitions will require investment beyond cell assembly. The country needs upstream suppliers capable of producing battery-grade materials at commercial scale.
Why the Existing ₹18,100-Crore PLI Scheme Is Not Enough
India introduced the ₹18,100-crore ACC production-linked incentive programme in 2021 to encourage domestic battery-cell manufacturing and establish 50 GWh of production capacity.
However, progress under the programme has faced challenges.
A Business Today report published in October 2026 highlighted delays in building large-scale domestic battery-cell manufacturing capacity. Companies have faced difficulties involving technology access, specialised equipment, skilled manpower and the availability of upstream components.
The report also noted that battery-cell imports had increased sharply, highlighting the gap between growing domestic demand and local production.
This illustrates why the proposed component incentive scheme is important. Even when companies establish battery-cell factories, dependence on imported cathodes, anodes and other specialised materials can leave much of the supply chain exposed to international disruptions.
A stronger domestic component ecosystem could help cell manufacturers secure supplies locally and gradually reduce import dependence.
Indian Companies Could Benefit From the Proposed Scheme
The proposed incentives could create opportunities for Indian companies looking to enter or expand in battery materials manufacturing.
Companies operating in speciality chemicals, graphite, advanced materials and energy storage could explore investments in cathode and anode production, electrolytes, separators and copper foil.
However, setting up these facilities requires significant capital, specialised technology, research capabilities and long-term customer relationships with battery-cell manufacturers.
The success of the scheme will therefore depend not only on the size of the subsidy but also on whether manufacturers can access technology, obtain raw materials and secure reliable demand for their products.
The government may also need to ensure that incentives encourage genuine domestic value addition rather than simply supporting the final stages of imported-material processing.
The Bigger Picture
India’s battery ambitions depend on building a supply chain that extends from raw materials and processed chemicals to battery cells and finished energy storage systems. The proposed ₹12,000-crore programme represents an effort to address the upstream manufacturing gap that has limited the development of a complete domestic ecosystem.
China’s established manufacturing scale and cost advantages make this a difficult transition. Financial support could help Indian companies overcome some initial investment barriers, but subsidies alone cannot guarantee competitiveness. Technology development, manufacturing efficiency, skilled workers and access to critical minerals will also determine whether domestic producers can compete internationally.
Looking Ahead
The next important step will be the government’s decision on the proposed incentive structure, including the eligibility requirements, subsidy rates, funding conditions and implementation timeline. Industry stakeholders are pushing for substantial capital and operational support, but the final policy may differ from the models they have proposed.
For Indian battery manufacturers, the scheme could create a new investment opportunity if it provides predictable, performance-linked support. Its longer-term impact will be measured by whether India can increase domestic production of battery materials, narrow the cost gap with China and reduce its reliance on imported components as battery demand expands.
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