India’s battery manufacturing faces a major gap with only 22% operational capacity. Imports surged 94% to 15,721 crore in the first quarter of FY27. Most facilities focus on assembling packs rather than cells. "Downstream manufacturing accounts for 92% of operational manufacturing capacity," the report said, keeping reliance on imports high.
India's battery storage manufacturing faces a major gap with only 22% operational capacity and just 8% for battery cell production, increasing reliance on imports amid rising EV demand and government incentives.
The shortfall comes amid a sharp rise in battery cell imports, which surged 94% year-on-year to 15,721 crore in the first quarter of FY27. Imports rose further in July 2026, jumping 159% to7,209 crore from Rs 2,772 crore a year earlier, according to commerce ministry data.
According to Mercom India Research's Energy Storage Manufacturing Ecosystem Report, most of India's existing manufacturing facilities are focused on assembling battery packs and complete storage systems rather than producing battery cells, the main component that stores electricity.
"Downstream manufacturing accounts for 92% of operational manufacturing capacity," the report said.
This means India has developed significantly more capacity to assemble batteries than to manufacture the cells used inside them. The study, which focuses on batteries used for storing electricity, found that the remaining identified manufacturing capacity comprised projects under construction or announced. The gap is significant as India continues to depend heavily on imports. In FY26, lithium-ion cell imports increased 64% to Rs 41,667 crore, with China accounting for around 85% of the total.
Demand for batteries is also growing with the increasing adoption of electric vehicles, which now account for 8% of new car sales and 11% of new two-wheeler sales. The government has been promoting electrification through programmes such as PM E-Drive and PM-eBus Sewa. Meanwhile, Gujarat has emerged as the largest centre for upcoming battery storage manufacturing facilities. "Gujarat accounted for 51% of the battery storage manufacturing capacity under construction," the Mercom report said.
Maharashtra ranked second with 20%, taking the combined share of the two states to 71% of capacity currently being developed. The report also found that new manufacturers account for 53% of India's identified manufacturing capacity, including operational and planned projects, while existing manufacturers represent the remaining 47%.
The government launched the Rs 18,100-crore production-linked incentive (PLI) scheme for advanced chemistry cells in May 2021 to encourage domestic production and reduce dependence on imported cells. However, progress has remained limited. According to Mercom, 28.6 gigawatt-hours (GWh) of manufacturing capacity was under construction among projects receiving active support under the PLI programme.
The government is also planning a separate Rs 12,000-crore incentive scheme for battery components, including cathode and anode materials, electrolytes and separators, to strengthen domestic manufacturing. Import dependence extends beyond finished battery cells. More than 90% of cathode and anode active materials are processed in China, according to industry estimates.
Manufacturing costs remain another hurdle. Industry estimates suggest battery cells produced in India could cost around 20% more than Chinese imports, making it difficult for domestic manufacturers to compete on price.
The findings highlight the difference between setting up battery assembly plants and building a complete domestic manufacturing base. While capacity to produce battery packs and energy storage systems has expanded, cell production and the availability of locally made materials remain limited.