Beyond the Cell: Battery Electrolyte Manufacturing in India

ISSUE BRIEF

Localising Battery Electrolyte Manufacturing in India

Capabilities, Constraints, and Policy Support

04 November, 2026 | Technology Futures

Varnika Prakash and Akanksha Tyagi

Suggested citation: Prakash, Varnika and Akanksha Tyagi. 2026. Localising Battery Electrolyte Manufacturing in India: Capabilities, Constraints, and Policy Support. New Delhi: Council on Energy, Environment and Water.

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Overview

India's battery manufacturing is built on imports it does not control. Almost the entire cell manufacturing industry depends on imported components, predominantly from China. This issue brief, the first in a series on localising cell component manufacturing, examines how domestic production of battery-grade electrolyte can strengthen India's battery manufacturing ecosystem. It assesses the capabilities India already holds, the constraints that have prevented the sector from developing, and the policy support required to close the gap.

The study finds that electrolyte manufacturing draws on industrial strengths India already possesses in fluorochemicals, petrochemicals, pharmaceuticals and fine chemicals, and that several Indian chemical companies have already begun to pivot towards the battery sector. Yet domestic cell manufacturing capacity stands at just 1.4 GWh, and a chicken-and-egg problem persists: electrolyte manufacturers withhold investment without an assured demand signal, while cell manufacturers continue importing because we lack trusted local supply at scale. The brief recommends coordinated action across ministries-covering equipment manufacture, testing infrastructure and standards, technology partnerships, research funding, fiscal support and assured public offtake-to break that deadlock.

Key highlights

The gap between ambition and delivery is stark. Domestic cell manufacturing capacity stood at 1.4 GWh in 2026, against an ACC PLI target of 50 GWh and announced capacity of around 150 GWh. Addressable demand for Indian-made electrolyte depends entirely on how much of that pipeline is built.
The import dependence sits one layer deeper than current policy reaches. India's incentive schemes target cell manufacturing, but almost all of the components that go into those cells are imported. Localisation will require policy instruments that measure and reward domestic value addition at the component level.
A chicken-and-egg problem holds the sector back. Electrolyte manufacturers withhold investment without an assured demand signal from domestic cell producers, while cell producers continue importing because no trusted local supply exists at scale.
Testing dependence adds months to commercialisation. Indian manufacturers rely on laboratories in South Korea, Japan and Germany to qualify their products, because India lacks accredited domestic facilities for battery-grade electrolyte. Quality specifications are set by individual cell makers' proprietary protocols rather than by standardised ones.
Indian chemical companies are already entering the sector. Several companies like Gujarat Fluorochemicals, Acutaas Chemicals, Neogen Ionics and Anupam Rasayan have each begun moving into battery materials - building capability in-house, licensing technology, forming joint ventures or integrating backward - drawing on strengths their existing businesses already hold.

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Varnika Prakash

Programme Associate

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“India already has the industrial capability to make battery electrolyte. What it lacks is not chemistry but specification-the purity standards, testing infrastructure and specialised equipment that battery-grade output demands. Closing that gap is a far smaller task than building an industry from scratch. Technology partnerships will remain necessary, but their terms matter- licensing delivers production capacity, while co-development is what builds the ability to innovate on it.”

Executive summary

India’s battery industry is built on imports it does not control. The entire cell manufacturing industry is almost 100 per cent dependent on imports for all cell components like electrolytes, cathode active materials (CAM), anode active materials (AAM), and separators primarily from China, which creates a deep vulnerability for the industry. This exposure is set to deepen as the global demand for batteries is expected to increase more than 2.6 times by 2030 to reach 4.2 terawatt hour (TWh) (Hughes 2026; McKinsey & Company 2026).

India will represent a small share, with some estimates putting its battery demand to rise 216 gigawatt hour (GWh) by 2030 (Jain and Jhunjhunwala 2025). However, despite the various initiatives to boost local production such as the Advanced Cell Chemistry Production Linked Incentive (ACC PLI) Scheme (MHI ACC PLI 2021) and the exemption of basic customs duty on capital goods used in manufacturing lithium-ion batteries (LiBs) (MoF, GoI 2026), as of October 2025, India commissioned only 1.4 GWh of ACC capacity under the PLI scheme (IEEFA and JMK Research Analytics 2026). The announced projects could take the domestic cell manufacturing capacity to around 150 GWh in the coming years.

This issue brief, first in the series of localising cell components manufacturing, examines how domestic production of battery-grade electrolyte can be a strategic lever in enhancing India’s current battery manufacturing ecosystem. The brief focuses on the lithium ion batteries given the largest share of contribution in the electric vehicles and energy storage (IEA Global EV Outlook 2026).

Key findings

Electrolytes account for around five per cent of the cost of a cell , with indispensable functionalities around cell safety and performance (McKinsey & Company 2026).
Electrolyte can be built by drawing on the strengths of fluorochemicals, petrochemicals, pharmaceuticals, and fine chemicals industries (Figure ES1) and is a cell component that India can manufacture locally.
India would require around 60,000- 90,000 tonnes of electrolyte to cater to a domestic cell manufacturing capacity of 150 GWh. However, the growth of electrolyte manufacturing in India is constrained by the limited domestic demand for locally manufactured electrolyte, dedicated incentives through policies, lack of advanced chemical processing machines, advanced purification systems, and battery-grade configured testing equipment.

The business models of electrolyte manufacturing companies globally can be categorised into five types (Figure ES2).

Figure ES1. India has the process and equipment capabilities to manufacture battery-grade electrolytes

Potential transfers from existing capabilities in pharmaceutical, fine chemical, and petrochemical industries

Established organic-solvent manufacturing base such as of ethylene carbonate and ethylene glycol
Experience of handling fluorochemicals like HF
Local availability of manufacturing equipment such as
- Aluminium-lined & HDPE drums
- Corrosion-resistant Hastelloy and PTFE-lined reactors
- Cryogenic refrigeration
- Acid and gas management systems
- Distillation units
- Drying systems

Gaps to close for battery industry

Improve raw material purity to battery-grade specification
Cryogenic process engineering skills
Convert existing manufacturing equipment, such as corrosion resistant reactors, for battery industry
Specialised equipment such as
- Zero-leakage magnetic-drive agitators
- Precision dosing and filling systems
- Sub-micron filtration for blending

Source: Authors’ analysis

Figure ES2. Five business models are prevalent globally for electrolyte manufacturing

Custom or contract formulation

Makers formulate and produce to the cell-maker’s specs. Offers flexibility, faster customisation, lower R&D burden for battery producers, next-gen chemistries.

Examples: LANXESS (subsidiary Saltigo, Germany to Tinci)

Vertical integration and self-supply

Cell makers produce electrolyte in-house and secure their IP formulations, cutting dependence on external suppliers.

Example: CATL (China)

Joint ventures

Electrolyte firms partner with OEMs/battery makers to co-develop chemistry-specific electrolytes. Offers long-term demand visibility, shared investment risk.

Example: Neogen Chemicals (India)

Localised gigafactory supply

Plants sited next to gigafactories for just-in-time supply, lower logistics cost and safer transport of hazardous liquid electrolyte.

Example: UBE Corporation (Louisiana), Tinci (Texas), CapChem (Louisiana & Ohio)

High performance

Advanced electrolyte for fast charging, high energy density, extreme temperature and next generation chemistries, R&D led

Example: Mitsubishi Chemical, UBE, Soul Brain (South Korea)

Source: Authors’ analysis.

Key recommendations

Government ministries should develop a coordinated policy approach to build a self-reliant, globally competitive, future-oriented electrolyte market in India (Table ES1).

Table ES1. Policy recommendations for localising battery electrolytes

Aim	Recommendations	Implementing ministries
1. Build domestic capability of machines and equipment to support battery-grade electrolyte manufacturing	Target grants and upskilling programmes to encourage indigenous manufacturing of electrolyte manufacturing machines	MHI (Capital Goods Scheme Phase II), CSIR-CECRI, CSIR-NML, CMTI, IITs, CSIR-NCL
2. Reduce dependence on foreign testing and OEM qualification	Invest in domestic testing infrastructure and introduce standardised testing norms	MHI, DST (FIST), CSIR-CECRI, CMET, NPL, IITs, NCL, ARCI, BIS, NABL
3. Build a domestic R&D and innovation base rather than relying on technology transfers	Orientate joint ventures (JVs) and international technology transfers for long-term benefits	Industry stakeholders, DPIIT MoC&F (DCPC), (IMPRINT with DST & MoE)
4. Develop next generation electrolyte materials, use indigenised processes and local resources	Encourage R&D for the next -generation electrolyte salts and manufacturing processes	MoC&F (DCPC), (IMPRINT with DST & MoE)
5. Create domestic demand via policy	Introduce direct fiscal support for manufacturing components in upstream segments	MHI, MoC&F (DCPC), BIS
6. Create guaranteed offtake for the domestic electrolyte	Introduce a phased local electrolyte sourcing norms for the upcoming gigafactories Approved List of Battery Component Manufacturers (ALBCM)	MHI, MoP, Ministry of Power, ACC PLI PMA, BIS

Source: Authors’ analysis.

FAQs

What is a battery electrolyte, and why does it matter?

The electrolyte is the medium that carries lithium ions between the cathode and anode inside a battery cell. It is made up of a lithium salt, usually lithium hexafluorophosphate (LiPF₆), dissolved in carbonate solvents with small quantities of additives. Although it accounts for only around five per cent of a cell's cost, it governs how safely and how well the cell performs, including its stability at high temperature and its tolerance to fast charging.
How much electrolyte will India need?

At the roughly 150 GWh of cell capacity India has announced, the requirement would be around 60,000 to 90,000 tonnes. The range reflects chemistries like lithium iron phosphate cells that use more electrolyte per kilowatt-hour than nickel manganese cobalt cells. Against that, only 1.4 GWh is commissioned today, so the addressable market is still very small.
Can India actually manufacture battery-grade electrolyte?

The underlying capability largely exists. Our mapping finds overlaps with each electrolyte materials: fluorochemical companies already handle the fluorine chemistry that salt synthesis needs, petrochemical refiners run the distillation trains for carbonate solvents, and pharmaceutical producers operate the reactors and purity controls additives require. India also has established markets in the upstream feedstocks, ethylene oxide and ethanol. What is missing is not the chemistry but the specification: battery-grade output demands moisture control, impurity limits and equipment that existing plants were not built for.
Why is the domestic electrolyte manufacturing ecosystem not developed yet?

Electrolyte manufacturers are reluctant to invest without assured demand from domestic cell producers, while cell producers continue importing because no trusted local supply exists at scale. Four further constraints compound this: limited cost competitiveness against subsidised imports, the absence of advanced processing and purification equipment, no accredited domestic testing infrastructure or accepted standards, and continued import dependence on precursor materials.
What needs to change for India to make its own electrolyte?

The brief recommends six actions across ministries: supporting indigenous manufacture of electrolyte production equipment; building accredited domestic testing infrastructure and India-specific standards; reorienting technology partnerships towards co-development rather than licensing alone; directing research funding at specific industrial bottlenecks; introducing fiscal support for component manufacturing; and creating assured demand through public procurement preference and a certified list of approved manufacturers.