Budget Should Focus on Lithium-ion Battery Manufacturing: Report

A report by JMK Research and the Institute for Energy Economics and Financial Analysis (IEEFA) says that the government should plan serious investment in the lithium-ion battery manufacturing department in the current year’s budget.

Their suggestions are based on the rapidly rising need for electric vehicles in the Indian market and energy storage solutions.

“Battery storage can help India transition by storing excess renewable energy when it is not needed and then discharging it when it is. In addition, batteries can also provide essential grid services,” said Vibhuti Garg, co-author of the report.

“In Budget 2022-23, the government must offer essential funding for domestic manufacturing of lithium-ion batteries (LiB) as well as, for instance, offering duty rebates in sourcing the raw materials for LiB manufacturing,” stated the report.

The government has allowed 100 percent foreign direct investment (FDI) in electric mobility and encouraged domestic manufacturing of battery packs. Due to this measure, LiB technology has overtaken lead-acid batteries in mobile and stationary applications.

The report predicts that India will be the world’s largest automotive market by 2026. 90% of LiB demand will be from India’s automotive applications, with the annual capacity surging to 50 times from 2.3 gigawatt hours (GWh) in FY 2021 to 104 GWh in FY 2030.

More battery assembly plants are being set up in India, and battery localization requirements are rising, owing to the second phase of the Faster Adoption and Manufacturing of Hybrid and EV scheme (FAME-II) that promotes the adoption of EVs, especially two- and three-wheelers.

The PLI Advanced Chemistry Cell (ACC) scheme is an initiative that aids local cell manufacturing. Moreover, stationary storage will be a critical contributor to the growth in EV adoption in accordance with the Union government’s renewable energy goals.

“Adding 450 gigawatts of renewables by 2030 will need 136 gigawatt hours of battery storage. India is poised to become a key LiB consumer,” said Jyoti Gulia, co-author of the report.

“End-use customers are wary of the quality of local assemblers’ packs, battery management systems (BMS), and the associated safety issues. There are lucrative opportunities, but current and potential players must be prepared for massive investments and low profit margins,” said Neha Gupta, co-author of the report.

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