Mar 28, 2025
Company News
-
-
- EN
On one hand, India's economy is a modern service hub known worldwide for its information technology services; on the other hand, it has traditional agriculture in urgent need of upgrading and a manufacturing sector full of potential but fraught with challenges. In recent years, the lithium battery and new energy industry has rapidly emerged as a bright spot, carrying multiple aspirations for India to adjust its economic structure, achieve energy self-sufficiency, and upgrade its industry. However, this path is intertwined with opportunities and challenges, deeply reflecting the internal logic and external constraints of India's economic development.
India's industrial structure exhibits a typical 'three-two-one' pattern, but there are significant differences in the development quality and economic contributions within each sector.
The primary sector (agriculture) acts as the society's 'stabilizer,' contributing about 16% to the Gross Domestic Product (GDP) and employing nearly half of the national workforce. This highlights its importance as an employment cornerstone. However, the sector grows slowly, has relatively low productivity, and is heavily dependent on monsoon rains, making its vulnerability a critical factor affecting overall economic stability and farmers' livelihoods.
The secondary sector (industry, including manufacturing) is officially deemed the 'growth engine,' accounting for roughly 25%-26% of GDP. Within this, manufacturing alone has long hovered around 13%, falling short of the ambitious 25% target set by the government. Although globally competitive industrial clusters have emerged in areas such as mobile assembly, generic pharmaceuticals, automobiles, and auto components, manufacturing as a whole still faces deep-seated constraints like infrastructure bottlenecks, complex land and labor regulations, and incomplete industrial chains, limiting its ability to generate mass employment and drive economic transformation.
The tertiary sector (services) is the absolute 'pillar' of the Indian economy, accounting for about 50% of GDP. Modern services, particularly represented by software and information technology outsourcing (IT-BPO), are world-renowned and generate substantial foreign exchange and high-skilled jobs. However, the strength of the service sector has not adequately translated into inclusive employment opportunities. There is a disconnect between its growth and the large low-skilled labor market, leading to a structural imbalance where high economic growth does not correspond with improvements in job quality.
Therefore, the core challenge for India's economy lies in how to leverage the strong service sector to drive broader employment while promoting breakthrough growth in manufacturing, thereby optimizing the economic structure for more balanced and inclusive development.
Under the dual pressures of energy security and climate change, India regards electric vehicles and energy storage systems as strategic priorities, and the lithium battery new energy market has exploded with huge potential, but it has also exposed its deep dependence on external supply chains.
1. Explosive growth in market demand
· Electric vehicles (EVs): Although the current penetration rate is less than 5%, the government has set an aggressive target of achieving 30% penetration by 2030 under the policy framework of the National Electric Vehicle Mission and other policies, and has introduced a number of purchase subsidies and tax breaks.
· Energy Storage Systems (ESS): To integrate the fast-growing wind and photovoltaic power, India has mandated the construction of new large-scale renewable energy projects to support energy storage. By 2030, the demand for new energy storage in the power sector alone is expected to reach about 28 gigawatt-hours (GWh).
· Overall demand: Combined with transportation and energy storage demand, India's total annual battery demand is expected to reach a staggering 260GWh by 2030, with a market size of billions of dollars.
2. Fragile local supply chains and deep Chinese involvement
In sharp contradiction to the strong demand, India's local battery manufacturing capacity is seriously insufficient. Up to 75% of battery demand currently relies on imports, the vast majority of which comes from China. Not only battery cells, but also key technical links such as cathode materials, separators to battery management systems, the Indian industry is in its infancy.
In order to seize market opportunities and respond to India's growing emphasis on "self-reliance" and local manufacturing requirements, Chinese new energy companies are not absent, but are actively adjusting their strategies:
· Technology licensing and joint venture cooperation: For example, Guoxuan Hi-Tech and India's Tata Group (Tata Group) technology licensing cooperation, Honeycomb plans to support local enterprises to build factories through technology licensing.
· Supply chain layout: Some Chinese material and equipment suppliers are beginning to consider or have set up factories in India to be close to the future market.
· Strategic investment: Chinese capital participates in the financing of new energy startups in India and makes a forward-looking layout.
3. Strong policy support
The Indian government is strongly promoting localized manufacturing through industrial policies. The core tool is the Production-Linked Incentive (PLI) program, which provides up to billions of dollars in production-linked subsidies to companies setting up advanced chemistry (ACC) manufacturing facilities in India. In addition, the FY2026 budget is expected to continue to provide support in R&D, critical mineral procurement, and charging infrastructure.
The future development of India's lithium battery and new energy industry depends on whether it can systematically overcome a series of severe challenges:
· Resource Bottlenecks: India lacks key battery minerals such as lithium, cobalt, and nickel, making the establishment of a stable and sustainable raw material supply chain a primary challenge.
· Infrastructure Deficit: The country has only about 25,000 charging stations, far insufficient to support widespread adoption of electric vehicles; the stability and smart capabilities of the power grid also need significant improvement.
· Technology and Talent Gaps: There are notable technological gaps in core battery material research, cell design, and process engineering, accompanied by a shortage of highly skilled industrial workers and R&D talent.
· Manufacturing Ecosystem and Costs: Building a complete, cost-competitive domestic manufacturing ecosystem from materials to finished products requires long-term, substantial capital investment and technological accumulation.
In summary, India's industrial structure depicts an economy striving to scale the peaks of manufacturing under the halo of the service sector. Its lithium battery new energy industry is a crucial touchstone in this climbing process. The market potential is undeniable, and the government's determination is evident, but industrial success cannot be achieved through demand and subsidies alone. In the coming years, whether India can effectively address gaps in resources, technology, and supply chains by attracting international cooperation and accelerating independent innovation will directly determine whether it can transform from its current role as a 'market-dependent player' into a true 'manufacturing participant' or even a 'technology competitor' in the global new energy race. This path of transformation concerns not only the future of India's energy and economy but will also reshape the competitive landscape of the global new energy industry.
