India readies $1.4 bn to dent Chinese battery power

India is on the brink of introducing a new incentive program worth up to $1.37 billion to help local battery cell component makers, as reported by sources familiar with the initiative. This initiative aims to close the cost gap between Indian and Chinese battery producers. While India already offers subsidies for making cells used in electric cars and energy storage, the initial batch of local battery makers have been facing supply chain challenges.

Prime Minister Narendra Modi's government is now seeking to boost the manufacturing of components that go into cells, according to these sources. The proposal is expected to be presented to the Indian finance ministry's Expenditure Finance Committee after inter-ministerial consultations. The financial support is intended to enhance energy security by fostering a domestic battery supply chain, which the government views as a strategic priority.

The incentives will cover five key battery components: anode and cathode active materials, electrolytes, separator film, and copper foil. Currently, most Indian battery manufacturers source these parts from Chinese suppliers, leading to a dependence on an economic and geopolitical rival. The new push builds upon an existing advanced battery incentive program, which has awarded 40 GWh as of March 2023 to recipients like Mukesh Ambani’s renewable energy unit and Ola Electric Mobility Ltd. However, recipients have faced delays in meeting production milestones due to various reasons such as technology unavailability, lack of skilled manpower, and critical imported equipment.