India looks east to this new ally to ease China’s grip on EV batteries

More than a dozen major Japanese players from the EV battery and critical mineral supply chain, including Panasonic, Mitsubishi Chemicals, Sumitomo Metals and Mining, Asahi Kasei and Nichia, among others, are currently in India to explore partnerships with Indian companies. All these companies are part of Japan’s industry body, Battery Association of Supply Chain (BASC).

From the Indian side, businesses “like Amara Raja and Reliance are participating in discussions with the Japanese industry”, one of the persons mentioned above said on condition of anonymity.

The talks are expected to focus on developing a diversified supply chain for lithium-ion batteries used in EVs and energy storage systems, as well as for critical minerals like lithium and graphite, with discussions likely to explore technological collaboration and joint R&D to counter China’s dominance across these markets.

Mintcould not independently verify the full list of Japanese and Indian companies who will be part of discussions. Queries sent to the Japanese and Indian firms remained unanswered till press time.

For Indian companies, the need to collaborate with other countries has become important as they struggle to source rare earth magnets from China, which controls 90% of their global supply and imposed restrictions on their exports this April. Alongside, several estimates peg China’s global market share in lithium battery production at around 80%, while Japan is estimated to have about 10% share.

Experts, though, are sceptical. Srihari Mulgund, partner at consultancy EY-Parthenon, said Indian players have to look for technology transfer and invest jointly in efforts to localise the battery technology. But partnerships with Japanese companies can only offer limited benefits, he argued.

“Collaborations with Japanese players in the EV battery and critical mineral chain offer limited scope because of the fact that China controls most of the value chain,” Mulgund said. “Mining, refining, and processing are dominated by China. Japanese players can help with battery material and technology, but their work has been more substantial on the hybrid front.”

In 2021, around 55 companies in Japan came together to form the BASC to strengthen the domestic industry’s competitiveness in the battery supply chain. While the total number of members in the grouping isn’t available, some publicly reported numbers keep it around 150 companies. Other major names include Nissan Motor Co and Toyotsu Lithium Corporation.

The background

Currently, Indian EV companies import more than three-fourths of their batteries from China, specifically from firms such as BYD, CATL, and EVE. Other countries that supply batteries include South Korea and Japan.

While Indian companies are building their own battery factories that are likely to go live between this fiscal and FY27, they are worried about the ability to match prices of cheaper Chinese batteries as domestic players are currently fully reliant on imports of key raw material lithium.

“I think everybody would have observed that the pricing coming out of China right now is quite aggressive,” Vikramadithya Gourineni, executive director for new energy business at Amara Raja Energy, told analysts in an earnings call on 30 May. “The cell pricing, the energy storage system (ESS) pricing. So definitely, that’s been on a downward trend.”

According to an industry executive working on EV cells, India-made batteries from domestic companies such as Amara Raja, Exide Industries, and Ola Electricare expected to be 20-30% costlier than Chinese counterparts who don’t have to rely significantly on imports for sourcing key raw materials.

The country’s government has set a target of achieving 100GWh of lithium-ion battery capacity that can feed the surge in EV sales, which touched nearly 2 million in 2024, growing at 27% over 2023, data from Vahan portal showed.

In 2021, the government announced a ₹18,100-crore production linked incentive (PLI) scheme for building battery capacity. Ola Electric, Reliance Industries and Rajesh Exports are among the firms that received a nod from the government to build the gigafactories.

However, none of them has so far managed to achieve the required milestones under the scheme and are behind their schedule of commercial production. They face a possible fine from the government but the companies have cited issues with sourcing raw materials and required technology to progress at the previously stated pace.

Other firms like Amara Raja, Exide Industries, and Tata Group’s Agratas are also building their own lithium-ion plants. Sajjan Jindal’s JSW Group, too, had previously expressed interest in making an EV battery plant.