India’s rising energy demands has placed a significant emphasis on securing sustainable and clean energy resources. With the global impetus towards renewable energy and the electrification of transportation, the importance of lithium as a key component in lithium-ion batteries has become paramount.

India has set an ambitious target of achieving a 500 GW capacity of non-fossil fuels-based energy and reducing CO2 emissions by 1 billion tons by 2030. Significant increase in electric vehicle adoption is required to achieve this goal.

India currently has a limited presence in the global supply chain for Advanced Cell Chemistry (ACC) technologies. The government has introduced the Production Linked Incentive Scheme for the ‘National Program on Advanced Chemistry Cell (ACC) Battery Storage’ with an outlay of ₹18,100 crore, with the goal of achieving a manufacturing capacity of 50 GW Hour of ACC battery storage.

Supply chains

However, building a robust domestic lithium-ion battery manufacturing ecosystem hinges on securing reliable supply chains for critical minerals like lithium.

According to the International Energy Agency, China’s share of processing is close to 60 per cent for lithium. China has made significant investments in overseas assets in Australia, Chile, DRC, and Indonesia.

In July 2023, the Mines and Minerals (Development and Regulation) (MMDR) Act 1957 was amended through the MMDR Act 2023 to increase exploration and mining of critical minerals with an objective to achieve self-sufficiency. Presently, the two blocks of lithium reserves, one each in Jammu and Kashmir and Chhattisgarh, are up for auction for a composite license. Besides domestic exploration, India needs to bolster its international engagements and undertake joint exploration activities for ensuring uninterrupted access to these critical minerals.

The US Geological Survey has estimated the global resources of lithium at 98 million tonnes (mt) in 2022. Argentina, Bolivia, and Chile, collectively referred to as the Lithium Triangle, account for roughly 53.1 per cent of the global lithium resources. The global production of lithium in 2022 was estimated at 130 thousand tonnes with Australia being the largest producer followed by Chile, China and Argentina.

While Australia was the largest exporter of unprocessed lithium (raw material) accounting for a global share of 82.1 per cent in 2022, China was the largest importer accounting for a global share of 84.6 per cent.

India’s moves

India leverages diplomatic ties for strategic mineral collaborations with resource rich countries through the Khanij Bidesh India Ltd. (KABIL), a joint venture with equity contribution of National Aluminium Company Ltd, Hindustan Copper Ltd and Mineral Exploration and Consultancy Ltd.

India signed an MoU with Australia’s Critical Minerals Facilitation Office (CMFO) in June 2020, followed by a detailed agreement between KABIL and CMFO in March 2022. This partnership, backed by a joint investment commitment of $6 million with equal partnership, focuses on joint due diligence for lithium and cobalt assets in Australia.

In January, KABIL and Argentina’s state-owned “Catamarca Minera Y Energética Sociedad Del Estado” signed an agreement for exploration and development of 5 lithium brine blocks in Catamarca province of Argentina.

India has joined the Mineral Security Partnership (MSP) in June 2023, becoming the 14th member alongside countries like the US, UK, Canada, Australia, South Korea, and Japan. India may need to devise a strategic funding mechanism for co-financing projects to secure strategic minerals like lithium in order to support domestic manufacturing of batteries necessary for the growth of the EV ecosystem.

The writers are economists with India Exim Bank. Views expressed are personal