Electric mobility is due for a boom in India. In 2024, EV sales increased to over two million vehicles ,rising 27% year on year, with projections predicting a surge of up to 30 million units by 2032, under the National EV Target (NEV) scenario (IESA). Government initiatives like PM E-DRIVE are accelerating market expansion.
The first phase of transport electrification focused on downstream activities like battery pack integration and vehicle localisation. However, EVs are fundamentally dependent on their batteries and India imports nearly all its lithium battery components. While the conversation around EV battery supply chains often centres on discovering raw mineral deposits, the true geopolitical and economic battleground lies midstream. Securing the raw material backbone of the automotive future will ultimately depend on critical mineral refining and processing capability..
The Midstream Processing Chokepoint
India will require large volumes of battery-grade chemical precursors to build a thriving battery manufacturing industry. Projections indicate that the domestic lithium-ion battery market will expand from 10.8 GWh in 2022 to between 160.3 GWh and 272 GWh by 2030.
To meet a 100 GWh annual cell manufacturing threshold, India would need roughly 193,000 tonnes of cathode active material (CAM) and 98,000 tonnes of anode active material every year. The existing ecosystem relies mostly on pack-level assembly rather than chemical cell production. The Rs 18,100-crore Advanced Chemistry Cell (ACC) Production Linked Incentive (PLI) scheme has struggled with this midstream gap; as only 1.4 GWh of the targeted 50 GWh had been successfully commissioned, as of October 2025.
In the critical mineral chain, the highest value is generated in the processing and refining stage. Refining transforms low-value ores into high-value battery chemicals, making it the stage where much of the economic value and technological capability are created. India has made strides in acquiring upstream assets, eg via Khanij Bidesh India Ltd. (KABIL); but without the capacity to refine these ores into battery-grade chemicals domestically, raw materials will still be shipped to other countries for processing.
Currently India has no meaningful lithium refining capacity and processing for cobalt and nickel intermediates is highly limited, which means that India still imports the downstream refined material at higher cost. India must build a domestic processing ecosystem that bridges the gap between raw ore and cell manufacturing, to capture value domestically.
The Supply Chain Vulnerabilities
Global clean energy transition has triggered surging demand for minerals. EVs require six times as many minerals as traditional cars, with critical raw materials accounting for roughly 60% of an EV battery’s manufacturing costs. On the other hand the midstream refining capacity is highly consolidated. All mined ores must undergo complex processing to become high-purity chemical precursors like lithium carbonate or nickel sulphate.
India along with importing all critical minerals, imports 60% of its natural graphite. China is at the center of this dependency as it controls 90% of global rare earth and graphite processing, 65% of lithium chemical processing, 74% of cobalt refining.
This near- monopoly grants the dominant nations who control either mineral resources or refining capacity significant geopolitical leverage. China's recent export restrictions on rare-earth magnets and processing technologies demonstrated how easily supply chains can be disrupted by dominant countries and expose manufacturers to price volatility and procurement risks.
For automakers, this is not a mining issue anymore. Battery materials account for a significant share of an EV's cost, meaning secure domestic refining can reduce supply disruptions, improve cost competitiveness and strengthen India's position as a global manufacturing hub.
Building Domestic Capability
The government recognises this vulnerability and has made strategic interventions such as the National Critical Mineral Mission (NCMM), through which India is aiming to secure domestic and international supply sources and support processing and recycling. India is also expected to roll out a scheme specifically for critical mineral processing soon. By vertically integrating mineral sourcing with local refining and cell production, such facilities will be critical in reducing India's import dependency.
Closing the Loop
A resilient EV manufacturing strategy must also look beyond virgin ore to secondary supplies. End-of-life lithium batteries are strategic assets containing critical minerals that can be extracted and in light of this, the government approved a ₹1,500 crore incentive scheme under the NCMM to boost India’s recycling capacity for critical minerals. Advanced recycling technologies can recover most cobalt and nickel, and substantial amounts of lithium from retired EV batteries, creating a highly lucrative domestic resource loop.
For India’s net-zero and electric mobility targets, success will not come from assembly alone. The next phase will be defined by mastering the battery supply chain. The choices made today regarding midstream processing, recycling policies, and strategic offshoring will define whether India becomes merely a large EV market or a globally competitive EV manufacturing powerhouse.
Manikumar Uppala is the Co-Founder and Chief of Industrial Engineering at Metastable Materials. Views expressed are the author's personal.