India is on its way to becoming a metals demand powerhouse that could rival China, as it will largely rely on imports to feed the tens of billions of dollars supporting its electric vehicle and clean energy supply chains.

India released its first critical minerals list on June 28, less than a week after the US welcomed India to the Mineral Security Partnership. This laid the foundation of the metals needed for India to meet its 2070 net-zero target.

"I hold no doubt that India will be the main driver for demand for [battery] metals," given India's EV supply chain build-out and ambitious renewable energy targets such as 300 GW of capacity by 2030, Mohan Yellishetty, who co-founded Monash University's Critical Minerals Consortium in Australia, told S&P Global Commodity Insights.

"Even if they produce some locally, that's very insufficient for their future demands. By meeting its own domestic needs, India could also play a huge role in providing critical raw material supplies to the rest of the world because of its huge, competent human resources and the scale and cost at which they could produce them compared to China," Yellishetty said.

India catching up as driver of demand

Having built out its supply chains for critical minerals decades ago, including rare earths, China's annual imports of battery metals such as manganese, copper and aluminum dwarf those of India, according to S&P Global Market Intelligence data.

However, India is catching up fast. This growth is driven by the electrification of its transport sector, which "must be decarbonized if India is to make the transition to sustainable energy and attain net-zero emissions by 2070," according to Jamal Amir, principal research analyst at S&P Global Mobility.

Billions of dollars are being invested to make this happen. India's Tata Motors Ltd. plans to sell a significant minority stake in its EV business and is looking for a valuation of about $10.5 billion, intending to use most of the proceeds of any stake sale to pay down some of its debt and inject a minor amount as primary equity in the EV business, Amir said in an email interview.

Taiwan-based charging services company Gogoro Inc. and India-based automotive systems supplier Belrise Industries Ltd. will also invest $2.5 billion over the next eight years, along with the Maharashtra government, to build EV battery-swapping and charging stations.

India's copper consumption is forecast to rise 13% per year on average to fiscal 2025, and the country "may overtake Japan as Asia's second-largest copper market" after China by 2025, according to Australia's Resources and Energy Quarterly issued July 3. "Consumption in India is set to benefit from key demographic factors — population growth, as well as higher copper intensity per capita, driven by higher urbanization and living standards," the report said.

India is a "massive market when it comes to renewable energy development," said Ian Prentice, managing director at Technology Metals Australia Ltd.

"The Central Electricity Authority in India has already estimated about 52 GW/260 GWh (i.e., five hours' storage duration) of battery energy storage systems will be needed by 2032," Prentice told Commodity Insights. "With this in mind, India will need supply of the critical minerals that enable energy storage."

Technology Metals agreed in April to supply vanadium raw material from its Murchison Technology Metals project in Western Australia to Indian vanadium redox flow battery manufacturer Delectrik Systems Pvt. Ltd.

Challenges to EV adoption, metals sourcing

While India's government has already introduced several EV-friendly policies to boost the competitiveness of domestic EV battery and component manufacturing, "there is still a lot to be done, as India still lags other key markets such as China, Europe, and the US, which are also providing generous EV incentives," Amir said.

Earlier in 2023, the Geological Survey of India found 5.9 million metric tons of lithium in the Jammu and Kashmir area — the first time a lithium reserve of that magnitude has been discovered in the country.

"In order to have a meaningful impact on cost reduction, localization of EV components, especially batteries, is extremely important, which will now benefit from the new-found lithium reserves," Amir said.

A free trade agreement between India and Australia, which is seen as a key supplier of critical minerals, came into force in December 2022. However, Minerals Council of Australia CEO Tania Constable said the final bilateral agreement "must reflect the intention of both countries for a strategic partnership that delivers supply chain security and the benefits created along the entire value chain."

"In relation to the work progressing on the India-Australia trade agreement, this should include the removal of tariffs and other protections such as the current 15% tariff on battery active material and 7.5% tariff on lithium hydroxide, or partially processed lithium," Constable told Commodity Insights.

Instead, Constable urged an approach that "enables the benefits of value-adding to be shared jointly through co-investment and government-to-government cooperation."

As for India mining its own battery metals, the main challenges are the establishment of proven reserves; exploration, mining and extraction technology; the high risk and capital required; and the regulatory framework, Federation of Indian Mineral Industries additional secretary general Bhawnesh Kumar Bhatia told Commodity Insights.

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