In a strategic move on the geo -political and economic front, Japan plans to invest in India’s electric vehicle (EV) and battery supply chain. Its purpose is for adequate investment from $ 100 million to $ 400 million ( EV, 860-3,500 crore in EV, battery manufacturing and recycling areas). A recent meeting in this regard was brought together with senior Japanese government officials, leading battery manufacturers, officials of automobile companies, and India’s largest group, EV producers, battery manufacturers and officers of private equity firms together. Potential capital is supported by the creation of joint enterprises (JVS), technology transfer agreements and new processing facilities, potentially India’s position as the major part of the diverse supply chain network of Asia. This article examines business opportunities and cooperation between Japan and India to promote the development of battery content and power dynamics.
Trade representatives and investment agencies from Japan are actively looking for potential Indian partners in various fields. This includes battery cell manufacturing, EV production, mineral processing and recycling activities. Interest is expressed in the partnership focused on the Catatic Converter recycling, which will provide access to platinum and palatium resources required for hydrogen fuel cells used in EVS. It also highlights sourcing and processing of major minerals such as lithium, cobalt and rare earth elements. These materials are important for the production of advanced batteries and electronics, making them strategic assets in the discovery of energy security and decarbonation. Discussions have also covered funding, participating in the Japanese private equity firm evaluation process. The purpose of this initiative is to secure the resources required for clean energy infections, as the global demand for electric vehicles and renewable energy continues to increase.
While India is making significant progress towards achieving pure-zero carbon emissions by 2070 through electrification of vehicles, it involves increasing EVS, which has increased the demand for EV batteries. This transition is inspired by progress in battery technology, charging infrastructure and assistant government policies. To strengthen the Make in India initiative, the government is implementing various incentives and subsidies to promote domestic manufacturing of EV components, especially battery cells. Meanwhile, the Japanese government has committed subsidy (up to 350 billion (about $ 2.4 billion) to support its domestic EV battery production. The initiative aims to increase Japan’s annual battery production capacity to 50%, which increases its supply chain and industry competition. The scheme is to reach 150 GWH of production capacity by 2030, and by 2030 the scheme is to reach 150 GWH, and to get the partnership with India to get these ambitious lectures by 2030. Can help. Japan is particularly interested in India’s plans to develop 30 GWH advanced chemistry cell battery storage.
India is quickly emerging as a prominent player in the global battery ecosystem, supported by its production incentive (PLI) and fame schemes. Under the Fame India Scheme Phase II, the phased manufacturing program (PMP) promotes the local construction of electric vehicles and their components, increasing the domestic price. Many government policies encourage the production of EV batteries in the country. GST rates for electric vehicles from 12% to 5%, and a decrease from 18% to 5% for chargers and charging stations has made EVS more cheaper.
In 2021, Government of India launched one 18,100-Crooked production-linked incentive (PLI) scheme to manufacture 100 GWH lithium-ion battery capacity. PLI scheme for automobile and auto component industry, Rs. With the budget of. 25,938 crore in five years, promoting local production of advanced motor vehicle technology goods and attracting investment. The PLI scheme for the manufacture of advanced chemistry cells (ACC) will also help in reducing the prices of batteries and reducing the cost of electric vehicles. The purpose of these government initiatives is to localize EVs and up to 60% of the battery supply chain by 2030. Japan considers India a viable option for China and a strategic partner in acquiring stable battery supply chains.
China holds an estimated 80% of the global lithium battery market and controls 90% of the rare Earth magnet supply. In April, China further tightened the export sanctions on rare earth, deepening concerns for Indian manufacturers. The price chain from mining to refinement remains largely under China’s control. The current geo -politics creates important opportunities for India and Japan to cooperate on important minerals and rare earth magnets. Consequently, recent investment global lithium-ion battery supply chains, significant mineral extraction and rare earth magnet production reflects Tokyo’s widespread strategic efforts to reduce dependence on China-are essential for transition to all clean technology and EVS. This investment marks a significant change in regional manufacturing strategies, in which Japan aims to set up an alternative supply chain network that reduces its dependence on Chinese-controlled resources and manufacturing. This supply chain will address increasing concerns about reliability and will seek a joint solution. The focus of discussions is on creating an alternative supply chain for lithium-ion batteries and major raw materials such as lithium and graphite, which is currently dominating China.
Indian EV companies currently import more than 75% of their battery from China. Other suppliers include Japan and South Korea, while India’s domestic battery capacity remains in its early stages. Indian companies are building their battery plants, but value competition is still an important challenge. Battery made in India is expected to be 20–30% more expensive than Chinese options due to high raw material import cost and limited local refining capacity. Japanese companies can help with material and technology. India will require adequate investment in raw material access and technology transfer to make significant progress. Japan’s expertise in chemical yogas, high-performance cell design and production processes can help India overcome initial operating challenges.
In addition, India’s battery manufacturing sector is seeing an increase in foreign direct investment (FDI), especially from major Japanese companies like Suzuki, Toshiba and Denso. The Government of India has reduced rules by allowing 100% FDI through automated route for ACC battery production. This strategic step reflects India’s commitment to become a prominent player in global manufacturing and lead the electric vehicle industry.
This bilateral effort reflects an investment strategy adopted by a growing China and Japanese firms, rapidly transferring supply chains to India. India is not only seen as a manufacturing center, but also as the entrance to high-development markets such as the Middle East and Africa supported by well-established business and talent network in these areas. In 2023, Japanese FDI in India highlighted a strategic change in regional economic priorities in China. Apart from the battery, both countries are searching for cooperation in electric vehicles, green hydrogen and digital energy infrastructure. These efforts not only address energy and industrial goals, but also strengthen geopolitical relations in the Indo-Pacific sector. Additionally, cooperation with international institutions is being encouraged to introduce state -of -the -art techniques and promote innovation in the EV industry. However, to convert India into a competitive hub for EV battery manufacture, there is a need to address challenges such as infrastructure development, availability of land, source of raw materials and a skilled workforce. Through these collective efforts, India aims to place himself as a major player in the Global EV battery manufacturing market supporting its ambitious environmental goals.
EV sales are estimated to reach two million units in 2024-2023 is increasing pressure on Indian companies to secure a 27% growth-growth-dominated and cost-skilled battery supply. In addition, by 2030, 30% of India’s 30% of the vehicle fleet is expected to increase at an annual growth rate of 49% between 2022 and 2030, reaching 10 million annual sales, the formation of the partnership becomes significant. Currently, strategic cooperation with countries such as Japan is considered essential to navigate the global battery landscape that grows rapidly. The objectives of localization of India and Japan, in line with the 350 billion EV initiative, aims to make a flexible option in the clean energy sector of Indo-Pacific. The EV and battery industries are now at the center of this developing relations.
This article has been written by Varun Shankar, Research Associate, Central Association for Private Security Industries.
