India's Battery Industry Demands a Business Strategy Prioritizing Long-Term Growth Established as well as up-and-coming Indian companies are becoming highly dependent on China, according to former trade negotiator Ajay Srivastava.

In parallel with the acceleration of the global economy's demand for electric vehicles (EVs), India has scaled up its investments in the production of lithium-ion batteries over the past few years. Although India's battery industry is still comparatively small in relation to the world's largest producers, the industry is projected to grow steadily. China has long been the dominant producer in this field, with estimates placing its share of the world's total battery manufacturing at 70%-75%. Moreover, Nikkei Asia reported that China held an 80% share in the production of key battery components such as cathodes, anodes, and separators. Beijing's control over key mining and refining sites tasked with providing critical minerals for battery manufacturing positions it with overwhelming influence over the industry globally.

The battery industry is a lucrative area of business, albeit one that involves the conundrum of navigating high-value investments and production, as well as an outsized degree of volatility in the market at the same time. On the technological side, battery chemistry, cell architecture, safety specifications, and customization for various applications from EVs to consumer products render it a high-stakes field. Production at competitive price levels also requires battery manufacturing companies to operate on economies of scale, providing for a particularly costly startup fee for newcomers.

On the other hand, companies often have to manage considerable volatility in the supply chain markets that battery production relies on. Lithium, cobalt, manganese, nickel, and graphite reserves are highly concentrated resources shared between a few countries. In addition to this, the mining, refining and export of critical minerals are often exposed to further significant risks. Collaboration with established giants in the field has therefore been tempting to many, due to the opportunities that quick access to technology, know-how, and built-out supply chains could provide. Indian manufacturers must nevertheless prioritize slower, but steady, independent growth on their own account.

According to some estimates, India's lithium-ion manufacturing market has the potential to be valued at over US$30 billion by 2032 with a steady compound annual growth rate of c.22%. This is in no small part due to the government's incentives to attract investment and encourage home-grown innovation as part of the 'Make in India' initiative as well as the Production Linked Inventive Scheme, combinedly providing financial support in the value of billions of dollars.

The success of this business strategy, however, rests not only on its public policy foundations but also on the compliance and shared vision of India's leading private sector entities. Joint public-private partnerships between the Indian government and the country's private sector are an absolute necessity for carving out a space in such a complex field of business with both economic and political risks to manage.

Indeed, closer integration between India's nascent and China's well-established industries might exacerbate risk and put the industry as a whole in jeopardy. According to former trade negotiator Ajay Srivastava, "Traditional and rising Indian conglomerates getting into new businesses like battery storage and clean mobility, having no expertise or technology, makes them highly dependent and reliant on China". In this regard, as prominent Indian firms consider striking cooperation deals with Chinese battery manufacturers – as the notable Reliance Industries and China's Hithium Energy Storage have been rumored to be working on – proceeding with caution is advised. Licensing agreements for the production of Chinese models of batteries bring with them the sourcing of raw materials from China's already built-out network of critical mineral miners and refiners, many of whom are government controlled. This is indeed the case with Hithium, the majority of whose supply chain is sourced from Chinese government-controlled entities.

At the same time, the sharing of technologies would also necessarily create intellectual interdependencies and common quality assurance responsibilities. Any potential future issue with a product would make it nearly impossible for Indian producers, like Reliance, to decouple from their Chinese counterparts. In addition to this, previous bouts of trade wars and other levers of geopolitics that Beijing has utilized have proven the disadvantages of getting too close to China in this market. Hithium's reputation in international business circles has been curtailed, especially since its listing by Congress as a company that the U.S. Department of Defense is not allowed to procure technology from. Several other Chinese companies in the battery manufacturing industry have faced the same ban.

The longer road to an independent Indian battery manufacturing industry with its own comprehensive network of support industries would, on the other hand, provide several protections from the above-mentioned market volatilities as well as guarantees for sustained domestic growth. Working towards the diversification of India's critical minerals supply sources would decrease the country's reliance on Chinese imports to an extent and build valuable trade relationships with miners, refiners and recyclers, who can support upstream supply security for decades to come. This is one area where public-private partnerships could provide immense benefits by deploying business incentives as well as tools of statecraft.

In a similar fashion, long-term investment in research and development, the ownership of intellectual property rights and production technology capabilities can shield India from emerging market shocks. The development of new technologies and revolutionary products by competitors can cut the sales of a company that does not have its own R&D to keep up with innovation. They might even be driven out of business. With their own labs at their disposal and state-of-the-art technologies in the making, however, Indian executives can protect their firm's competitive edge even in the face of such challenges.

In the battery manufacturing industry, the path to lasting success runs through the mine, the lab, and the factory. For companies in this high-stakes, capital-intensive, and fast-evolving sector, short-term wins from the adoption of inexpensive technology offer similarly short-term advantages. The complexity of the global battery landscape demands a long-term approach to growth, grounded in innovation, resilient supply chains, and deep sustainable partnerships.