India is set to take another major step towards strengthening its energy security and electric vehicle (EV) ecosystem. So far, the government’s focus has been on promoting battery cell and EV manufacturing. However, attention is now shifting to the critical components that are essential for completing the entire supply chain. With this objective, the government is preparing to introduce a new incentive scheme that could play a crucial role in reducing the country’s import dependence and making the battery value chain more self-reliant.
Over the past few years, initiatives such as the PLI schemes, PM E-DRIVE, and the Critical Mineral Mission have laid a strong foundation for the EV sector. This new initiative aims to strengthen the early stages of battery manufacturing and provide fresh momentum to India’s long-term energy strategy.
Let us understand India’s Battery Component Scheme in detail and explore whether this theme could become a significant investment opportunity for investors.
What’s Happening?
The Government of India is preparing to finalise a new incentive scheme worth around Rs 12,000 crore to promote the domestic production of components required for advanced battery manufacturing. Under this scheme, financial assistance will be provided for manufacturing key components such as Cathode Active Material (CAM), Anode Active Material (AAM), electrolytes, and copper foil separators. Currently, India is entirely dependent on imports for these critical components, creating risks related to both supply chains and costs.
This time, the government also plans to implement strict conditions to prevent companies engaged only in final-stage processing from availing themselves of the benefits, ensuring that genuine value addition is encouraged. This scheme will be separate from the existing Rs 18,100 crore ACC PLI scheme, which is primarily focused on battery cell manufacturing.
The objective of the new initiative is to strengthen the early stages of the battery supply chain and build self-reliant production capabilities within the country.
India’s Dependence on Battery Components and Policy Structure
India has announced nearly 223 GWh of battery capacity in the private sector. However, the country remains heavily dependent on imports for major components required for battery manufacturing, including Cathode Active Material (CAM) and Anode Active Material (AAM). These two materials alone account for nearly 70% of the total material cost of lithium-ion batteries, making a strong supply chain strategically important.
According to IEEFA and JMK Research, India’s battery demand is expected to rise from 28 GWh in 2025 to around 272 GWh by 2030, representing a CAGR of 36.5%. To meet this demand, India will require more than 4,00,000 tonnes of CAM and over 2,00,000 tonnes of AAM by 2030. Without developing a domestic upstream supply chain, both the import bill and strategic risks could rise significantly as demand increases.
According to an IEEFA report published in April 2026, India is 100% dependent on imports for critical minerals such as lithium, cobalt, and nickel. In 2025 alone, the country imported 18,200 tonnes of lithium compounds worth approximately $1.2 billion, with 68% of the supply coming from China. The new Battery Component Scheme aims to reduce this dependence at the processing level and build a stronger and more self-reliant supply chain.
Challenges of the ACC PLI Scheme and the Need for a New Scheme
The ACC PLI scheme, launched to promote battery cell manufacturing, has not progressed at the expected pace. Out of the targeted capacity of 50 GWh, only 1.4 GWh, or about 2.8%, has become operational, with Ola Electric accounting for a major share.
So far, investments worth Rs 28.7 billion have been made, representing only 26% of the target, while employment generation has remained limited to 1,118 jobs compared to the target of more than one million jobs. According to IEEFA, the lack of availability of upstream components has been a key reason for this slow progress. The new Rs 12,000 crore scheme is an attempt to address this gap.
Copper Foil and Supply Chain Risks
The global supply of battery-grade copper foil is concentrated among a handful of countries and companies. Nearly 80% of the world’s production capacity is controlled by Chinese companies, while around 20% is controlled by Korean companies. India imports 80-85% of its battery-grade copper foil requirements.
To address this challenge, Hindalco announced in March 2025 that it would establish the country’s first EV copper foil plant under a Rs 45,000 crore investment programme. This could play an important role in reducing import dependence in the future.
What Does This Mean for Investors?
This scheme could create new opportunities for companies involved in battery materials and the EV supply chain. According to ICICI Direct, companies such as HEG, with its graphite anode facility, Graphite India through its agreement with the Maharashtra government, and Hindalco through its copper foil business, could emerge as potential beneficiaries.
In addition, copper producers, specialty chemical companies, EV component manufacturers, and capital goods suppliers could also benefit from this theme. As policy clarity improves, the long-term growth prospects for these sectors could strengthen further.
What’s Next?
India continues to focus on reducing import dependence and promoting domestic manufacturing across emerging sectors such as electric vehicles, defence, and space. Alongside the existing Rs 18,100 crore ACC PLI scheme, the proposed Battery Component Scheme could provide strong support to the battery manufacturing capacity being developed in the country.
According to industry estimates, more than 4,00,000 tonnes of CAM and over 2,00,000 tonnes of AAM will be required to support India’s planned 223 GWh domestic battery capacity by 2030. Meanwhile, in Budget 2026-27, the basic customs duty exemption on capital goods used in lithium-ion cell manufacturing was extended, which could provide an additional boost to local production.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
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