Amara Raja expects battery cells manufactured in India to carry an initial cost premium of around 20-25% over comparable Chinese products, highlighting the economic challenge facing the country’s efforts to build a domestic lithium-ion cell manufacturing ecosystem.
Speaking at the inauguration of the Customer Qualification Plant (CQP) at the Amara Raja Giga Corridor in Divitipally, Telangana, Jayadev Galla, Co-founder and Chairman, Amara Raja Group, and Vikram Gourineni, Executive Director, Amara Raja Group, said the company does not expect Indian manufacturers to match Chinese pricing when domestic gigafactories begin production. However, they expect the gap to narrow over time as manufacturing scales up, local supply chains mature and government-backed localisation initiatives gather pace.
According to the company, battery pack assembly is already relatively competitive in India because the highest-value component, the battery cell itself, continues to be imported. As a result, assembling battery packs locally does not currently face the same level of cost disadvantage as manufacturing cells. The larger challenge lies in localising cell production, where China benefits from decades of scale, a deeply integrated supply chain and significant cost advantages across raw materials, processing and manufacturing equipment.
The company said the estimated 20-25% premium should be viewed as an initial benchmark rather than a fixed number, noting that the economics are evolving as more companies announce investments across India’s battery materials value chain.
It added that several Indian companies are investing in battery materials, a development it expects will gradually strengthen the domestic ecosystem. However, battery manufacturing equipment remains heavily dependent on China. While countries such as Japan and South Korea offer alternative equipment suppliers, the company said those options currently involve higher costs, longer lead times and lower manufacturing capacity than Chinese manufacturers.
Referring to a recent McKinsey analysis, the company said the report estimated battery cells manufactured in Southeast Asia would carry about a 10% cost premium over China, while production in Europe and the United States could be around 40% more expensive. It said India is expected to fall somewhere between those benchmarks, although it did not provide a broader industry estimate.
The company said improving cost competitiveness will depend on multiple factors, including higher production volumes, greater localisation of battery materials, supportive government policies and sustained domestic demand. It added that investments by battery manufacturers would encourage more suppliers to establish operations in India, helping improve economies of scale across the value chain.
Despite the initial cost disadvantage, Galla and Gourineni said domestic cell manufacturing remains strategically important for India’s EV industry. They said the objective is not only to reduce import dependence but also to build sovereign manufacturing capability in a technology that is increasingly viewed as critical by major economies.
The executives also pointed to geopolitical developments as another factor reshaping the global battery industry, with many countries seeking to develop domestic manufacturing capabilities rather than remain dependent on imports. In that context, they said India’s battery manufacturing ecosystem is expected to evolve steadily, even if locally manufactured cells initially carry a cost premium over Chinese products.