Batteries to autos: Chinese imports remain in top gear

NEW DELHI: The surge in electric vehicle (EV) sales in India has led to a significant increase in the import of batteries from China, which now stands at $2.9 billion from April to August, making it the sixth largest import item from China this year, according to the latest commerce department data. This growth has surpassed categories such as electronic instruments, electric machinery, plastic raw materials, and residual chemicals.

The inability to achieve technological breakthroughs in India has resulted in a continued reliance on battery imports from China. Local battery manufacturers, despite setting up operations post-PLI, are primarily packaging cells imported from China.

Additionally, imports of two-and three-wheeler vehicles have skyrocketed to $107 million during the same period, up from $2 million a year ago. Car imports have also increased by 2.6 times to $226 million in the first five months of FY27, compared to $87 million in the corresponding period last year, with BYD likely contributing to this growth.

Other imports, including gold, silver, oil products, dye intermediates, and bulk minerals, have also seen substantial increases. However, these categories remain insignificant compared to electronics, machinery, chemicals, and plastics, which account for around three-fourths of imports from China.

Despite India's strong position in the electronics and telecom value chain, with higher production of mobile phones, computers, and other devices, Chinese imports have not decreased. In fact, imports of telecom equipment and electronic components have grown by over 40% in the first five months, contributing to a widening trade deficit with China that reached nearly $56 billion in the same period, up from $44.7 billion in April-Aug 2025. This deficit is expected to surpass the 2025-26 figure of $112 billion.

Finance Minister Nirmala Sitharaman and Commerce and Industry Minister Piyush Goyal have expressed concerns over the situation, urging for a "fair deal." Despite a 40% increase in Indian exports this year, a significant portion consists of inputs, with average monthly exports remaining below $2 billion during April-Aug. Replacing Chinese goods is challenging due to China's cost advantages, economies of scale, and subsidies.

China's unwillingness to relinquish any ground is evident as it continues to dominate the entire manufacturing spectrum, leaving other countries struggling to catch up, as noted by S&P Global Chief Economist Paul Grunwald. To mitigate the impact of potential Chinese supply disruptions, Ajay Srivastava, founder of trade think tank GTRI, stressed the need for Indian industries to create domestic capacity and deepen local manufacturing in various sectors.