Battery component makers may get up to 50% capital subsidy

New Delhi: The ministry of heavy industries is considering capital subsidies of up to 50% and sales-linked incentives to accelerate domestic manufacturing of battery materials and components, as India seeks to reduce import dependence and build a local supply chain.

The ministry is weighing three models of support, including a subsidy covering 25% of eligible capital expenditure, coupled with component-specific operating incentives of 5% to 18% of eligible sales, officials told ET.

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A second option involves sales-linked incentives of 11% to 37% for five to seven years, without any capital assistance. The third proposes a capital subsidy covering 50% of project costs, disbursed alongside investments.

A decision on the scheme's final contours is expected shortly, an official said. The immediate objective is to build domestic component manufacturing capacity sufficient to support at least 50 GWh of annual cell manufacturing by 2032.

The proposed incentives will cover lithium iron phosphate and nickel manganese cobalt cathode materials, natural and synthetic graphite anode materials, electrolytes, separators and battery-grade copper foil. Aluminium foil could be excluded, as the official estimate considers the existing domestic ecosystem sufficient.

"The support is expected across end uses, including electric vehicles, stationary energy storage and electronics, rather than restricting eligibility to particular applications," the official said, adding eligibility and disbursements could be linked to investment, capacity, domestic value addition, commissioning and actual sales.

The push comes against the backdrop of India's cost disadvantage in battery component manufacturing. A techno-commercial study backed by domestic industry estimates that materials and components account for about 76% of cell manufacturing costs. Indian manufacturing costs are 18% to 61% higher than landed Chinese benchmark prices, depending on the product.

Also read: Indian battery component makers face up to 61% cost disadvantage against imports: Report

ET reported in June that the government was firming up a scheme to promote domestic battery component manufacturing.

India is stepping up its import substitution drive as it seeks to build domestic capabilities in emerging manufacturing sectors, including electric vehicles, defence and space applications. The ministry of heavy industries already runs a ₹18,100-crore production-linked incentive scheme for Advanced Chemistry Cell (ACC) battery manufacturing, targeting 50 GWh of domestic capacity.

India will need more than 200,000 tonnes of anode active materials (AAM) and 400,000 tonnes of cathode active materials (CAM) by 2030 to support domestic battery manufacturing capacity of around 223 GWh, according to industry estimates.

Copper foil is another critical component where global supply is concentrated. Chinese companies account for as much as 80% of global copper foil capacity, followed by South Korean manufacturers with a 20% share, according to a report by the International Copper Association of India on battery supply chain indigenisation.