India Lithium-ion Battery Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The market for lithium-ion batteries in India is expected to register a CAGR of 17.21% during the forecast period. The market value of 2020 is USD 1.66 billion, and the estimated market value for the year 2026 is USD 4.14 billion. The COVID-19 pandemic has impacted the lithium-ion industry due to disruption in the supply chain, as the country is largely dependent upon imports of batteries and the required materials such as lithium and cobalt. Factors such as the decline in lithium-ion battery prices along with the emergence of new and exciting markets, i.e., electric vehicle and energy storage systems (ESS), for both commercial and residential applications are expected to be the major drivers for the lithium-ion battery market in India. However, the lack of prominent raw material reserves required for the manufacturing of lithium-ion batteries is expected to pose a challenge for local production and the market for lithium-ion batteries in the country.

Key Highlights

• The portable segment is expected to be the largest segment in the Indian lithium-ion battery market during the forecast period.
• The Government of India has set an ambitious target of achieving 30% EV sales by 2030 across all modes. Hence, the process toward mass adoption of electric vehicles in the country is expected to create significant opportunities for India's lithium-ion battery market in the future.
• India’s plans for increasing the adoption of electric vehicles likely to drive the lithium-ion battery market in India.

Key Market Trends

Portable Segment Expected to Dominate the Market

• Lithium-ion batteries are commonly used in electronic devices, such as smartphones, laptops, clocks, watches, and remote controls. Sales of consumer electronics are very much dependent on the country’s population and disposable income. The increasing disposable income of India over the recent years, has led to rising living standards, driving the demand for consumer electronics.
• The lithium-ion battery technology offers much better energy density in joules of energy per kilogram than the previous battery technologies, such as nickel-cadmium (NiCd) and nickel-metal hydride (NiMH). Apart from that, the rate of self-discharge is much lower for lithium-ion cells than other rechargeable cells, which has led to its increased popularity. Therefore, the availability of smaller batteries with better charge retention has become imperative for electronic devices' energy requirements.
• In recent years, the availability of the internet at extremely cheaper rates has increased smartphone penetration drastically in India. As of January 2020, the India Smartphone market surpassed the United States for the first time on an annual level, becoming the second-largest smartphone market after China globally, reaching 158 million shipments in 2019, with 7% YoY growth. This is due to the mid-tier segment's growth, where Chinese brands aggressively introduced many flagship-grade features and capabilities to capture demand coming from users looking to upgrade from their first or second smartphone. Additionally, the online channels became the preferred selling platforms to introduce these products (Xiaomi, Realme, Vivo, etc.) faster into the market.
• According to the Telecom Regularity Authority of India (TRAI), India's overall tele-density decreased from 86.66 at the end of April-20 to 86.15 at the end of May-20. The Urban tele-density declined from 140.06 at the end of April-20 to 137.81 at the end of May-20. Rural tele-density increased from 58.85 at the end of April-20 to 59.23 at the end of May-20. The share of rural and urban subscribers in the total number of telephone subscribers at the end of May-20 was 45.19% and 54.81%, respectively.
• Additionally, the launch of favorable schemes, such as ‘’Make in India’’ and ‘’Digital India’’, is expected to significantly lower the cost of manufacturing of consumer electronics, in turn becoming more affordable for the section of the population living in rural areas of the country, where consumer electronics penetration is low.
• Therefore, owing to the above points, the portable segment is expected to dominate the India lithium-ion battery market during the forecast period.

India’s Plans for Increasing Adoption of Electric Vehicles Likely to Drive the Market

• Though the electric vehicle market is still in its initial stages in India, it is expected to witness significant growth going forward, as the government has undertaken various initiatives to promote electric vehicles in the country. India has a vision of becoming a major EV adopting nation by 2030. In the process toward mass adoption of electric vehicles in the country, the government has announced several policies and incentives, which are expected to drive the market during the forecast period.
• India has been witnessing a surge in manufacturing batteries locally, owing to the government’s thrust on e-mobility. The Government of India aims to achieve a 30% electric fleet by 2030. Also, in July 2019, the Government of India announced income tax exemptions for prospective EV buyers and reduced goods and services tax (GST) on EVs from 12% to 5%. In March 2019, the Government of India approved setting up a National Mission on Transformative Mobility and Battery Storage to drive clean and sustainable mobility initiatives with a 5-year phased manufacturing program (PMP) till 2024.
• Furthermore, in August 2018, the government directed an outlay of INR 5,500 crore for the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) India Scheme (which came into effect in April 2019) to encourage the adoption of EVs and local manufacturing of lithium-ion batteries. Thus, several automobile component manufacturers and power and energy solution providers in India, such as Amara Raja Batteries, have plans to manufacture lithium-ion batteries locally to leverage the booming green vehicles market in the country.
• However, the FAME India Scheme (which started in April 2019) was supposed to end by 2022. However, with the approval of competent authorities, the Union government, on June 25, 2021, decided that the FAME India Phase II Scheme will be extended for two years, i.e., up to March 31, 2024. Also, in Q1 of 2021, the Union government increased incentives on electric two- and three-wheelers to help boost broad-based adoption. According to some industry experts, the government was desperate to utilize the funds earmarked for the FAME scheme, with the sale of EVs remaining muted for the past two years.
• Further, with the FAME II program's backing, the deployment of electric buses in India increased rapidly in 2019. Electric bus fleets now operate in cities such as Kolkata, Mumbai, Pune, and Bengaluru. New registrations have doubled over a year, reaching 450 units, bringing India’s electric bus fleet to more than 800 vehicles in 2019.
• nMoreover, as of March 2021, Ola Electric, a subsidiary of Ola Cabs, plans to set up a cell manufacturing unit for its lithium-Ion battery to be used in Ola’s soon-to-be-launched two-wheeler electric vehicles. Furthermore, in June 2021, the French battery system maker Forsee Power started its series production of lithium-ion batteries for electric two-wheelers (E2W) and electric three-wheelers (E3W) in Pune (Chakan Industrial Area, 35 km from Pune Airport).
• Therefore, owing to the above points, India's plan for increasing adoption of electric vehices is expected to drive the lithium-ion battery market in the country during the forecast period.

Competitive Landscape

The India lithium-ion battery market is fragmented. Some of the major players operating in the market include TDS Lithium-Ion Battery Gujarat Private Limited (TDSG), Bharat Electronics Limited (BEL), Okaya Power Group, Telemax India Industries Pvt Ltd, and Toshiba Corporation.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support