India Automotive Lithium-ion Battery Market Assessment, By Type, By Construction, By Capacity, By Distribution Channel, By Region, Opportunities and Forecast, FY2018-FY2032F

India automotive lithium-ion battery market is projected to witness a CAGR of 10.11% during the forecast period FY2025-FY2032, growing from USD 1.25 billion in FY2025 to USD 2.70 billion in FY2032. The market is experiencing rapid growth, driven by the increasing demand for electric vehicles (EVs) and supportive government policies aimed at promoting clean energy.

The government launched several pivotal initiatives for the electric vehicle ecosystem growth, infrastructural and supported development on the FAME II front, and the production-linked incentive scheme with an incentive for indigenous domestic battery manufacturing. This policy support is complemented by an increase in sales of battery-operated vehicles, which indicates a profound shift towards electric mobility. In addition, it aims to achieve 450 GW of renewable energy by 2030, which stimulates a rising demand for lithium-ion batteries as a crucial energy storage solution that finds its way into the broader country's strategy towards sustainability and energy security. For instance, in February 2023, the government of India presented the Union Budget, where they levied basic customs duty exemption on imported machinery used in manufacturing lithium-ion batteries used in EVs, vehicle parts, and subsystems. Also, the government reduced customs duty on lithium-ion batteries from 21% to 13%, and concessional basic customs taxes were extended for electric vehicles and hybrid batteries.

Despite the promising upward trajectory for the Indian market for lithium-ion batteries, production risks are faced mainly due to raw material availability issues, specifically a demand-supply mismatch for certain critical raw materials such as lithium. Besides, fragmentation with many players in the Indian market creates competitive pressure that may adversely affect price realization and sustainability.

Electric Vehicle Adoption to Support Market Expansion

The growing adoption of electric vehicles in India is significantly leading the growth of the automotive lithium-ion battery market. The growth trajectory is bound to accelerate further, buoyed by strong government schemes such as FAME II for the development of the ecosystem for EVs and the Production-linked Incentive Scheme aimed at boosting domestic battery manufacturing. As consumers prefer more eco-friendly options for transportation, battery-operated vehicles showed a surge in sales. For instance, in 2023, the International Trade Administration reported that the sales of battery-operated vehicles were approximately USD 8 million, projected to grow to USD 118 billion in 2032, starting from USD 23 billion in 2024. The steep growth decreases the carbon footprint and turns toward clean energy solutions. Furthermore, the goal of having 450 GW of renewable energy capacity in India by 2030 will increase the demand for lithium-ion batteries, which is the primary energy storage and management requirement.

For instance, in May 2024, Exide Industries Ltd announced a partnership with Hyundai Motor Company and Kia Corporation and is engaged in discussions with most of the two-wheeler companies with electric vehicle programs to supply lithium-ion batteries. The aim of the Memorandum of Understanding (MOU) for strategic cooperation is an electric vehicle (EV) expansion plan. With the expansion of their EV plans for the Indian market, Hyundai Motor Company and Kia Corporation aim to localize their EV battery production, specifically focusing on lithium-iron-phosphate (LFP) cells. This strategic move will position them as the pioneers in applying domestically produced batteries in their upcoming EV models in the Indian market.

Government Initiatives to Boost Market Growth

The Indian government has taken several strategic steps to strengthen the automotive lithium-ion battery market, thereby increasing the country's adoption of electric vehicles. Among these, one of the most essential schemes launched was Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II) in April 2019, with a budgetary allocation of USD 118.92 million over three years for promoting electric mobility. This scheme provides financial incentives to consumers who buy electric vehicles, including front-line purchase price relief, thereby making the adoption of EVs by other consumers much more accessible. Along with that, FAME II focuses on adequately establishing charging stations. In March 2022, 2,877 public charging stations were proposed under FAME II in around 68 cities and major highways to ensure easy access by users for charging. Then, the Production-Linked Incentive Scheme, with a budgetary outlay of USD 3.49 billion in 2021, was launched, adding an incentive to manufacture batteries and other EV components locally so that importing does not have a poor supply of the commodity to the consumer. Another point is addressing issues regarding pollution and improving the level of energy security. The Indian government seems to be putting the nation on the world map for the uptake and production of electric vehicles and batteries while creating a conducive environment.

For instance, in September 2024, at the 64th Automotive Component Manufacturers Association of India (ACMA) Annual Session, the Union Minister for Heavy Industries announced that the Electric Mobility Promotion Scheme (EMPS) will be extended until the rollout of the third phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME-III). The government is unwaveringly committed to advancing India's EV ecosystem focusing on fostering local manufacturing and sustainable growth. Benefits for incentives will be extended to vehicles fitted with advanced batteries, such as lithium-ion batteries or advanced chemistry cells (ACCs), to encourage advanced technologies.

Lithium Nickel Manganese Cobalt Oxide Batteries Accounts for Dominating Market Share

The lithium nickel manganese cobalt oxide (NMC) battery segment dominated the Indian automotive lithium-ion battery market primarily because demand for decarbonization and a shift to clean energy sources takes center stage to meet India's aggressive EV adoption and renewable integration targets. As concerns toward sustainable transportation solutions continue growing, NMC batteries hold the center of focus since they offer good energy density and thermal stability alongside other qualities. The aim of the Indian government in 2030 is to attain 30% of electric vehicles in the total automobile industry, which creates the necessity for more efficient, reliable battery technologies than before. The NMC batteries hold special preference in the EV market as the balanced features of the battery make them suitable for diverse applications. Domestic production increases because of initiatives undertaken by the government, and it will further augment the supply chain's resilience and make it more import-independent. Batteries will become more efficient with technological developments, and the cost is expected to decline; thus, the NMC segment will dominate the market in the forecast years.

For instance, in July 2024, Ola Electric Mobility Ltd. unveiled India's first indigenously developed lithium-ion cell, NMC2170. Built in-house, Ola started the mass production of its cell from its upcoming Gigafactory in 2023. The state-of-the-art High Nickel Cylindrical Ola Cell uses NMC on the cathode side and Graphite and Silicon on the Anode side. The use of specific chemicals and materials enables the cell to pack more energy in each space and improve the life cycle of the cell, keeping the indigenous conditions at the core.

Future Market Scenario (FY2025-FY2032F)

Robust government initiatives and schemes drive electric vehicle (EV) adoption and enhance domestic battery manufacturing capabilities, creating a supportive ecosystem for market expansion.

The shift towards electric mobility indicates a growing consumer preference for EVs and escalating demand for lithium-ion batteries.

Although supply constraints of raw materials and market fragmentation have their challenges, ongoing technological advancements and rising recycling initiatives will likely make it a lucrative opportunity for India in the global lithium-ion battery market.

Key Players Landscape and Outlook

India automotive lithium-ion battery market will experience high growth in years to come which will primarily be driven by increased demand for electric vehicles (EVs) and positive government initiatives that aim to create an ecosystem for EVs and support domestic battery manufacturing. Key industry players are investing in their manufacturing capabilities. One of the most prominent partnerships is Suzuki's collaboration with Toshiba in constructing a battery cell manufacturing plant in Gujarat. Even as raw material supply constraints persist, growth opportunities are going to be highly lucrative in recycling technologies and the development of local supply chains. The market is changing rapidly, and the country is likely to be an integral player in the global lithium-ion battery market owing to the transitions toward sustainable energy solutions.

Tata Chemicals Limited and Mahindra & Mahindra Limited are investing in their manufacturing capabilities, reflecting a strategic move towards self-sufficiency in battery production. As technological advancements continue to enhance battery performance and reduce costs, the synergy between rising EV adoption and lithium-ion battery demand redefines India's automotive landscape, positioning it as a key player in the global transition to sustainable energy solutions. For instance, In August 2023, Tata Sons Private Limited announced its plan to set up a lithium-ion cell manufacturing gigafactory in Gujarat, infusing USD 119.084 thousand (INR 13,000 crore). A Memorandum of Understanding (MoU) has been signed between Tata Sons Private Limited-backed subsidiary Agratas Energy Storage Solution and the Gujarat Government.