Crude oil shaped energy security in the fossil-fuel era. Batteries are becoming similarly important to energy security in the clean-energy economy. For India, however, this shift brings a new vulnerability.
Domestic battery manufacturing remains limited, with a significant share of demand met through imports. More concerning is the concentration of those imports in a single source: China. China's share of India's lithium-ion accumulator and battery imports has continued to rise in the post-Galwan period, crossing 90% – far above Russia's share of India's crude-oil imports. Such concentration exposes India's clean-energy transition to geopolitical and supply-chain risks familiar from its dependence on imported fossil fuels.
Energy security depends not only on how much renewable-energy capacity India deploys, but also on its ability to secure the technologies and supply chains that underpin it.
Changing the Economics of Domestic Manufacturing
The Ministry of Finance's recent customs notification seeks to strengthen that capability. It removes import duties on 85 categories of specialised capital equipment used across battery manufacturing – from material preparation and electrode production to cell assembly, testing and supporting utility systems.
The policy draws an important distinction between the inputs needed to manufacture batteries and finished batteries themselves. Specialised production equipment that previously attracted customs duties of 7.5–15% can now be imported duty-free, while finished batteries continue to attract a 20% basic customs duty. This changes the relative incentive in favour of importing the machinery required to manufacture batteries in India rather than importing finished batteries.
Creating the Conditions for Investment
Gigawatt-scale battery facilities require substantial investment in highly specialised equipment, much of which must currently be sourced from overseas. Exempting this equipment from customs duties until 31 March 2029 lowers initial investment costs while giving manufacturers a relatively predictable policy horizon.
That horizon is particularly relevant to an industry with long investment cycles. Battery plants can require 18–24 months for construction, followed by another 12–24 months to ramp up production. The exemption period therefore extends across much of the period in which today's investment decisions would translate into operating capacity.
The measure also complements the Production Linked Incentive (PLI) Scheme for Advanced Chemistry Cell. While the PLI rewards production after manufacturing begins, the customs exemption reduces costs at the earlier investment stage. Together, the two instruments address different points in the investment cycle.
The effects could extend beyond individual battery manufacturers. As production expands, process learning can deepen and specialised suppliers and ancillary industries can develop around large manufacturing facilities, creating capabilities and employment beyond the battery plants themselves.
The Next Vulnerability Is Upstream
Building factories, however, does not by itself secure India's battery supply chain. Those factories will require a steady supply of battery materials and critical minerals. If domestic cell manufacturing expands while key inputs remain heavily import-dependent, India may reduce its dependence on imported finished batteries only to shift that dependence upstream to materials and intermediate inputs. Domestic manufacturing would still represent an important gain, but securing the inputs on which those factories depend must become the next frontier of India's battery strategy.
The lesson from oil dependence is not that India must produce everything domestically. It is that external dependence becomes more vulnerable when essential supplies are highly concentrated in a single source. Building domestic manufacturing capability can reduce that exposure, but resilience also requires secure and diversified access to the materials and inputs that domestic production requires.
The recent customs notification is therefore an important part of India's battery strategy, but it cannot be the endpoint. A successful strategy must do more than build factories: it must also secure the materials and inputs those factories require, so that India's clean-energy transition does not reproduce, in a new form, the vulnerabilities of the fossil-fuel era.