Battery storage manufacturing in India: A strategic perspective

6 min readMar 31, 2021

Battery storage manufacturing in India is driven by an emerging market

India is one of the few countries with a Nationally Determined Commitment (NDC) that is consistent with the 2-degree Celsius emission goal set under the 2015 Paris agreement.[1] Some of the major milestones under India’s NDC are the country’s renewable energy targets of 175GW by 2020 and renewable energy (RE) as 40% of installed power generation capacity by 2030.[2] India has set a similarly ambitious target for electric vehicles (EVs): that 30% of all vehicles are EVs by 2030.[3]

However, RE generation is typically not only variable and intermittent but also inflexible in nature. Given the predominantly inflexible nature of the Indian power grid due to high reliance on coal-based generation and lack of gas-based generation, higher renewable penetration under India’s NDC will likely result in requirements of various flexible technologies.[4]

One such technology gaining momentum globally is battery energy storage, specifically Lithium-ion batteries. This is mainly attributed to the rising demand for battery powered electric vehicles globally.[5] According to an estimate, energy storage global demand is projected to rise 17GWh in 2018 to 2,850GWh by 2040 with India emerging as the third largest market, given applications to both RE and EV.[6]

This emerging market potential has motivated Indian policymakers to consider developing India into a global manufacturing hub for battery storage. However, this motivates us to ask questions such as: What is the minimum set of barriers India must overcome to develop domestic manufacturing competencies around new battery storage technologies? What are the different factors policymakers should consider for allowing successful deployment of battery storage technologies? Here, we focus on the first question.

Developing battery manufacturing competencies would require a strategic perspective

In order to prescribe a strategic manufacturing perspective to developing battery storage manufacturing competency in India, we first identify the various pathways India could potentially embark on. We find that there are mainly two approaches that have been successfully adopted by various countries: One, a research focused approach or the top-down approach; and two, a manufacturing focused approach or the bottom-up approach. The top-down approach comprises of the country first developing the necessary knowledge base through investment in research and development. This is then followed by followed by commercialization of technology and development of full-fledged manufacturing prowess Conversely, the bottom-up approach involves the country capturing the market share initially through development of manufacturing competency and then followed by moving up the value chain to more research intense activities.

Given India’s limited experience in developing new generation battery technologies (such as Lithium-ion) and its late arrival in the industry, the bottom-up approach may be more appropriate.[7] With this as the basis, we develop and verify a critical barrier framework which highlights the minimum set of barriers that need to be overcome for obtaining industrial competency in battery storage.

We build this framework by combining learnings from two diverse strands of literature — namely industrial science and management science. Specifically, we assess multiple literature on industrial catch-up,[8] and Porter’s Diamond Theory of National Advantages.[9] While the literatures on industrial catch-up dictates the general approach for our framework, its critical elements are identified from Porter’s theory. Within this framework, we identify three main barriers: (1) Getting to Scale, (2) Infrastructure and Resources, and (3) Global Competitiveness. We posit that industrial competency can only be achieved when all these barriers have been overcome.

We verify the critical barrier framework by case study research method. We test the framework across various successful and struggling industries such as: Indian Automobile Industry, Indian Pharmaceutical Industry, Chinese Solar PV Industry, United States Solar PV industry, Indian Solar PV Industry. From these cases studies, we find that all the three barriers have been overcome by successful industries whereas at least one of the barriers from our framework has not been overcome by the struggling industries.

Indian policymakers should focus on boosting domestic demand as well as developing global competence

Based on our findings, we suggest that Indian policymakers start by developing demand side policies with
an emphasis on protection to domestic manufacturers from foreign competition. Once domestic manufacturers achieve economies of scale through capturing domestic as well as international demand, Indian policymakers may allow foreign competition within the country which will result in increased market efficiencies thereby making domestic manufacturing globally competitive. In this context, while any short-term infrastructure and resource requirements can be met by the industry, policymakers should also invest in them in parallel to further bolster them. Further, they should also consider developing policies that promote research and development early on since this would be crucial for the growth of any manufacturing industry in the long-term.

Based on worldwide best practices, and reflecting on early feedback from government officials, the following measures could provide guidance on the broader recommendations above. First, on boosting domestic demand, these measures may include the following:

· Set targets, both EV (e.g., as in China, CA)[10] and power related (e.g., as in CA)[11].

· Remove administrative barriers to storage deployment.[12]

· Help set up adequate charging infrastructure for electric vehicles.[13]

Further, we find that subsidies may not be required for EVs; [14] however, enabling business models and financing mechanisms would be key.

Second, on protectionist measures, these measures include the following:

· Ensure government (esp. EV) demand is met through domestic manufacturing (e.g., as in the US[15], China[16]).

· Ensure (e.g., > 50%) domestic content requirement on all sales (e.g., as in Malaysia[17], Indonesia[18]).

· Impose import tariffs on foreign goods — e.g., batteries (e.g. as in the US[19]), EVs (e.g., as in India[20]).

Third, on developing self-reliance, The measures include the following[21]

· Ensure basic R&D (and education) is supported (e.g., as in the EU[22])

· Enable tech transfers via partnerships (e.g. as in the US[23])

· Provide adequate infrastructure — e.g., power, transport, manpower, etc.

To conclude, India has set ambitious targets for RE and EVs; getting to these targets would critically depend on developing self-reliance on battery manufacturing. Via our research, we have identified the need for a strategic approach to battery manufacturing, including not only broad directional measures but also specific actions. We hope that the Indian policymakers would consider applying these insights towards India’s journey towards becoming s

[1] Climate Action Tracker. 2019. India — Country Profile. https://climateactiontracker.org/countries/india/.

[2] Varadhan, S. 2019. India plans to add 500 GW renewable energy by 2030: government. https://www.reuters.com/article/us-india-renewables/india-plans-to-add-500-gw-renewable-energy-by- 2030-government-idUSKCN1TQ1R9.

[3] See https://www.forbes.com/sites/scottcarpenter/2019/12/05/can-india-turn-nearly-200-million-vehicles-electric-in-six-years/#2e736b3e15db

[4] Udetanshu, B Pierpont, S Khurana, and D Nelson. 2019. Developing a roadmap to a flexible, low-carbon Indian electricity system: interim findings. Climate Policy Initiative .

[5] Stubbe, R. 2018. Global Demand for Batteries Multiplies. https://www.bloomberg.com/news/articles/2018-12-21/global-demand-for-batteries-multiplies.

[6] Bloomberg New Energy Finance. 2019. Energy Storage Outlook 2019.

[7] Sampath, S, D D Sarma, and A K Shukla. 2016. Electrochemical Energy Storage: The Indian Scenario. ACS Energy Letters 1162−1164.

[8] Malerba, R and R Nelson. 2011. Learning and catching up in different sectoral systems: evidence from six industries. Industrial and Corporate Change 1645–1675.

[9] Porter, M E. 1990. The Competitive Advantage of Nations. Harvard Business Review.

[10] See https://www.forbes.com/sites/energyinnovation/2020/07/06/california-can-still-lead-america--and-the-world-on-electric-vehiclesdespite-trump/#28b1b16571b6

[11] See https://electricenergyonline.com/energy/magazine/777/article/Inside-California-s-Aggressive-Energy-Storage-Mandate.htm

[12] See Kumar and Shrimali, 2020, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3616404

[13] See https://theicct.org/sites/default/files/publications/EV-charging-best-practices_ICCT-white-paper_04102017_vF.pdf

[14] See Shrimali, 2020, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3618028 as well as http://cef.ceew.in/masterclass/analysis/low-cost-policy-pathways-for-electric-vehicle-deployment

[15] See https://uaw.org/wp-content/uploads/2019/07/190416-EV-White-Paper-REVISED-January-2020-Final.pdf

[16] See https://www.nbr.org/publication/chinese-government-support-for-new-energy-vehicles-as-a-trade-battleground/, https://chineseclimatepolicy.energypolicy.columbia.edu/en/electric-vehicles, and https://www.eesi.org/articles/view/comparing-u.s.-and-chinese-electric-vehicle-policies

[17] See http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=COM/TAD/ENV/JWPTE(2013)27/FINAL&docLanguage=En

[18] See http://www.eiu.com/industry/article/1588632542/government-makes-a-play-for-the-electric-vehicle-market/2019-10-31

[19] See https://www.greentechmedia.com/articles/read/trump-administration-lowers-import-tariffs-on-chinese-batteries

[20] See https://economictimes.indiatimes.com/industry/auto/auto-news/government-hikes-duty-on-import-of-electric-vehicles-by-5-15/articleshow/73845858.cms?from=mdr