Battery Recycling Key to Securing India’s EV Future

India’s electric mobility transition is burgeoning, propelled by well directed government initiatives such as FAME-II, PM E-DRIVE and state-level EV policies. The national target is 30% electric vehicle (EV) penetration across vehicle segments by 2030. Along with this, India is also investing in domestic battery manufacturing, charging infrastructure and the development of a local electric vehicle supply chain. The success of the transition depends on vehicles being deployed from production to roads and more importantly on whether India can secure, process and retain the materials required to power them.

Conventional internal combustion engine (ICE) vehicles consume fuel throughout their operating lives but electric vehicles are materials intensive upfront. Their lithium-ion batteries rely on critical minerals such as lithium, cobalt, nickel, manganese, graphite. India imports much of its crude oil needs and remains almost entirely dependent on imports for lithium ion cells and battery grade refined materials. With the lessons learned from crude, electrification is a chance for the nation to move away from external resource dependence by developing domestic material recovery capabilities. This is where battery recycling can play a bigger role than an end-of-life waste management activity and help the country’s clean mobility infrastructure.

The Supply Chain Behind the Gigafactories
The Indian Government released a ₹18100 crore Production linked Incentive (ACC- PLI) scheme for increasing the country’s cell manufacturing capacity with the aim to establish 50 GWh capacity, and increasing that capacity to reach 100–120 GWh by 2030. Manufacturing capacity is essential to establishing domestic capacity but it does not necessarily mean an interdependent supply chain.

Critical minerals and active materials account for approximately 33-48% of lithium battery pack costs rising to 55 to 62% for high energy NMC chemistries. Combined, these can contribute approximately 12 to 40% of domestic value addition in battery manufacturing. Under the ACC PLI framework, manufacturers must progressively increase domestic value addition from 25% within two years to 60% within five years.

Achieving these targets require domestic access to battery grade lithium, nickel, cobalt, manganese, and graphite alongside the precursor and cathode active material manufacturing capabilities needed to supply cell producers. Battery recycling can directly contribute to this upstream ecosystem and end-of-life batteries and manufacturing scrap can be converted into secondary materials for industrial use through appropriate recycling and refining processes.

A distinction must be made between recycling capacity and a closed loop supply chain. Shredding batteries into black mass is an intermediate step and if that material is exported for refining, much of the value creation that can be done domestically is lost. For recycling to supply Indian gigafactories, the industry must develop the ability to recover, refine and supply materials that will meet the specifications of the cell manufacturing ecosystem. The objective should be to connect domestic recyclers directly with material processors and cell manufacturers, creating a functioning domestic supply loop.

Making Recycling Commercially Viable Across Battery Chemistries
The strategic case of recycling is clear but its commercial viability will ensure how quickly the industry can scale.

The economics of recycling can vary significantly across chemistries as chemistries with more valuable materials like nickel rich NMCs, cobalt rich LCOs yield better margins for recyclers. India’s mobility market however increasingly relies on lithium iron phosphate (LFP) batteries, particularly across cost-sensitive two-wheelers, three-wheelers and electric buses. LFP offers advantages in cycle life, thermal stability and manufacturing cost, but contains no cobalt or nickel. Lithium, which represents approximately 2–3% of cell weight, becomes its principal recoverable high-value metal. Consequently, spent LFP batteries may command only ₹32–50 per kg. Hence if lithium prices decline, the economics of recycling LFPs can become increasingly difficult. Feedstock acquisition can account for 60–75% of operational expenditure, while specialised transportation, processing consumables, working capital and plant utilisation further influence margins. Large-scale refining infrastructure also requires consistent throughput.

For mobility manufacturers, this makes long-term recycling partnerships commercially relevant. OEM toll-recycling agreements, predictable feedstock commitments and material offtake arrangements can create greater certainty for both recyclers and manufacturers.

Extending Battery Value Beyond the Vehicle

The relationship between recycling and mobility extends beyond material recovery. Automotive batteries are retired from their original vehicles when their State of Health (SoH) declines below 70 to 80%. But they still have significant economic life and batteries with sufficient capacity can be used for energy storage for another six to ten years before material recovery. For mobility operators, this is an opportunity to improve asset utilisation of the battery. Second life batteries can support stationary storage systems and do it potentially at 40–60% of the cost of new cells, subject to testing, refurbishment and safety requirements.

This cascading lifecycle also has implications for EV financing. Today, uncertainty around battery degradation and residual value creates risks for commercial vehicle financiers, leasing companies and fleet operators. A structured ecosystem for battery diagnostics, second-life repurposing and eventual material recovery can establish more transparent residual-value benchmarks.

From Regulatory Compliance to Strategic Industry Partnerships

India's Battery Waste Management Rules, 2022, have introduced Extended Producer Responsibility obligations for battery producers, including vehicle manufacturers, cell manufacturers and importers.

Material recovery requirements for EV batteries are scheduled to increase from 70% in FY 2024–25 to 80% in FY 2025–26 and 90% from FY 2026–27 onwards. Recycled-content obligations begin at 5% in FY 2027–28 and increase to 20% by FY 2030–31.

For automotive companies, these requirements should be viewed as an opportunity to build long-term industrial partnerships rather than simply fulfil statutory obligations.

Making Clean Mobility a Circular Industrial Ecosystem

India's clean mobility ambitions cannot be realised through vehicle electrification alone. They require a domestic ecosystem capable of manufacturing batteries, managing their performance throughout their operating lives, extending their utility through second-life applications and recovering their materials for future production.

The vehicles being deployed today represent tomorrow's secondary material inventory. Building the infrastructure to recover that value is an industrial investment in the future of Indian mobility.

Manikumar Uppala is Co-Founder and Chief of Industrial Engineering at Metastable Materials. Views expressed are he author's personal.