India's ambitious goal of reaching net-zero carbon emissions by 2070 requires significant investments in renewable energy, electric mobility, and energy storage. India has already shown its commitment to reducing carbon emissions by increasing renewable energy capacity, setting up charging stations for electric vehicles, and promoting the use of EVs through incentives and subsidies. However, one significant challenge for India's EV industry has been the lack of domestic raw materials to produce lithium-ion batteries. India has been importing about 70% of its battery-cell requirements from China and Hong Kong. But that could change soon.
In 2023, India made a significant discovery of high-quality lithium reserves in Jammu and Kashmir. The discovery of 5.9 million tonnes of lithium reserves has ignited the debate about whether India can utilize this huge find sooner to challenge the dominance of countries like China in the world of EVs, smartphones, and other consumer electronics items.
Lithium is a critical raw material for advanced storage technologies that store electric energy as electrochemical and convert it back to electric energy as and when required. With the increased adoption of electric mobility in recent years, there is a huge demand for Li-ion batteries. According to industry experts, the recent finding of 5.9 million tonnes of lithium in Jammu & Kashmir will significantly boost the sector.
India's lithium cell production is projected to be 70-100 GWh by 2030. If the 5.9 million tonnes of lithium reserves found in J&K are completely extracted and converted into battery-grade lithium, it can support up to 6 TWh of cell production, giving India a much-awaited push to achieve its net-zero goals. However, now comes the hard part of converting this reserve into a commercially-viable resource after mining and refining it, which is a daunting task.
According to the Council on Energy, Environment and Water (CEEW), the country will require Rs 33,750 crore of investment to meet its domestic lithium-ion battery manufacturing target of setting up 50 GWh of lithium-ion cell and battery manufacturing plants. The government will need to infuse a lot of money and expertise to achieve this. But the benefits of doing so could be enormous.
Coupled with a favorable announcement by the government during the Union Budget 2023 on the exemption of customs duty on imports of capital goods and machinery for manufacturing of li-ion cells for EV batteries, this indigenous supply of lithium reserves will help the EV eco-system reach the masses at reasonable and affordable costs.
Additionally, this will also support the government's vision of EV mass adoption by 2030. The government intends to grow EV sales in India to capture the markets of 30% of private cars, 70% of commercial vehicles, and 80% of two and three-wheelers by 2030. The find could enhance India's aspirations of becoming a green industrial power and change the medium- and long-term outlook for lithium availability, helping avoid a lithium access race between the US and China.
The discovery of lithium reserves in India is a major development that will help India attain self-reliance across the entire end-to-end EV supply chain ecosystem, including having access to lithium for battery manufacturing. With this discovery, India will become a strong and emerging leader in the EV space. Lithium is the new white gold, and India is sitting on a gold mine. The time has come to put these reserves to commercial production soon and leverage this opportunity to achieve our net-zero goals.
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