Cathode To Graphite, India's Battery Majors Still Lean On China — And Time Is Running out

India's two biggest battery makers have spent the last two years building the country's first homegrown lithium-ion cell lines. Exide Industries has equipment installed and running across all four production lines at its Bangalore gigafactory. Amara Raja Energy & Mobility has inaugurated a customer qualification plant and is preparing to start its research facility this quarter.

But beyond the manufacturing story and an uncomfortable one sits underneath: almost every gram of raw material going into those cells, from cathode powder to electrolyte to graphite, still comes from China.

"Right now, raw material is still from China"

Exide managing director and chief executive officer Avik Kumar Roy did not dress this up on the company's August 3 earnings call. Asked directly how the company would manage sourcing as Chinese export rules tighten, he said the company was in talks with several interested Indian companies, many of them listed, and was running pilots with them. But he was blunt about the timeline: "for India to develop its own raw material sourcing, it will take the next three to five years. So right now it is from China."

The risk is not hypothetical. Roy confirmed that China's export control regime does not yet cover battery raw material, but that this changes from November. "This is not a ban. This is only additional approvals, which are required as a kind of export control," he said, adding that Exide may have to "keep a higher level of inventory so that there are no delays" once the new rules kick in.

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On technology, Exide believes it has timed its bets well. Roy said the company completed its licensing tie-ups and built its main production lines before Chinese curbs on technology transfer began appearing elsewhere in the industry. Its pilot line, meant to build in-house cell development capability, comes second by design. "Our production lines came first and the pilot lines will come later," he said, contrasting this with rivals who built pilot capability first and may now face delays sourcing machinery from China.

A collapsed tie-up, and a plan B

Amara Raja's experience shows what can go wrong when that sequencing does not hold. Chief financial officer Delli Babu Y disclosed on the company's August 11 call that an earlier technology partnership for NMC cells, with China's Gotion, did not go through as planned.

The company has since leaned on its own engineering team to develop the cell further. "There is a bit of de-risking that has happened on the technology talent point of view and our own ability to adapt or develop technologies," Babu said, adding that a broad-based technology arrangement with any Chinese partner is not realistic "given the geopolitical restrictions."

Both companies are now trying to build a domestic raw material ecosystem largely from zero. Exide is targeting 50-60% localisation of its battery bill of materials within two to three years, working with multiple Indian companies on cathode, negative electrode and electrolyte development. Roy named no partners but said discussions were under way on several fronts, including with a listed domestic company he described as a serious contender to localise electrolyte production first: "I can hazard a guess that going forward if the first component that can be localised according to us will be possibly electrolyte."

India's battery story.
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The upstream challenge goes well beyond any single component. Roy said India does not yet have the basic industrial base to support a domestic supply chain. "We have to put up refineries for lithium if we are serious EV players, which calls for large investments. We need people to make the cathode-active material here, need people to make the graphite here for negative," he said. "This takes time and this needs a lot of hand-holding by the government."

Import duty, PLI, and a Chinese pricing edge that won't last

The policy backdrop adds urgency. Cell imports into India currently attract a duty of just 5%, Roy confirmed, a level he expects to come under review only once local capacity is deep enough to matter. He compared the situation to solar manufacturing, where the government maintains an approved list of domestic makers that OEMs must buy from. "If you have about let's say 15 GW to 18 GW around local cell capacity, I am sure the government will take this case of approved list of cell manufacturers or something like that," he said, while cautioning that forcing localisation too early would raise costs for automakers and, in turn, electric vehicle prices.

Exide is also weighing whether to reapply for the government's reopened production-linked incentive scheme, which has made a fresh 10 gigawatt-hour of capacity available for bidding. "This is interesting, at least this is a good signal from the government," Roy said, adding that Exide had built its first 6 gigawatt-hour of capacity without any PLI support at all and was still studying the fine print before committing.

On price, Roy said Indian cell makers remain at a structural disadvantage to Chinese suppliers of 15-20%, largely a function of China's deeper supply chain. That gap could narrow from two directions over the coming months. China's export rebate on cells, currently 6% after being cut from 9%, disappears entirely from January 1, 2027, a change Roy said would show up directly in landed import costs once it takes effect. Separately, he pointed to a knock-on effect from the Middle East crude oil crisis: Chinese electric vehicle factories are now running at full capacity to meet surging domestic demand, leaving battery makers there "fully loaded to serve the domestic demand" and, in his assessment, less inclined to dump excess cells into export markets at low prices.

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A tech tie-up that fell through

Amara Raja's experience adds a cautionary note to the localisation push. An analyst asked directly on the August 11 call whether the company's China dependence extended to technology, not just materials, referencing an earlier disclosed setback with Chinese partner Gotion. Chief financial officer Delli Babu Y confirmed the tie-up "did not go through as planned," and said the company had since leaned on its own engineering team to take the licensed cell design further than originally intended.

Asked whether Amara Raja was now looking to partner with a non-Chinese player for LFP technology, Babu did not rule it out but was non-committal: "we'll be definitely be on a need base wherever we think any external help augments our own internal capability, we will definitely be working on a case-to-case basis." He added that "given the geopolitical restrictions, I don't think a broad-based technology arrangement with anyone from China is possible" at this point.

The November deadline

The most immediate risk sits on the raw material side rather than finished cells. Exide's Roy confirmed that Chinese export controls announced for certain core materials do not currently extend to processed battery inputs such as cathode or anode material, but that this changes from November. "This is not a ban. This is only additional approvals, which are required as a kind of export control," he said, adding that Exide may have to "keep a higher level of inventory so that there are no delays" once the new rules take effect.

Amara Raja's chief financial officer was asked about the same risk, referencing reports of Chinese restrictions on cathode material and graphite exports first flagged in October last year and since deferred by a year. His response was more guarded: "At this point of time, I am not aware of any specific restrictions... but I will double-check once again, and if I have any news, I'll update you."

Both companies frame this as an industry-wide problem rather than a company-specific one. Roy said India needs "two, three more players" to scale up domestic cell capacity before the government can consider restricting cell imports the way it has signalled for solar. Until that capacity exists, choking off imports would force automakers to either cut EV production or raise prices, an outcome he said policymakers are wary of forcing.

For now, both companies are pressing ahead with what capacity they can build locally while continuing to depend on Chinese suppliers for the materials and, in Amara Raja's case, the technology that make the cells work. The clock on that dependency, by their own admission, is now measured in months rather than years.

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