EV Boom In India To Drive Battery Demand To 256.3 GWH By 2032

Over the past years, India's electric vehicle (EV) sector has rapidly evolved from early pilot projects to mainstream adoption, which was largely driven by supportive government policies, rising fuel prices, and increased consumer interest. This transformation has fuelled demand for electric vehicle ("EV") batteries which is expected to grow by more than fourteen times, escalating from around 17.7 GWh in 2025 to an anticipated 256.3 GWh by 2032, showcasing a strong compound annual growth rate (CAGR) of approximately 35 percent. This rapid growth trajectory is supported by ongoing policy initiatives, rising consumer acceptance, a swift increase in the variety of EV models available, and advancements in battery technologies, including next-generation lithium iron phosphate (LFP Gen 4) and emerging sodium-ion solutions.

1. EV Battery Market Expansion: Legal and Policy Backdrop

India's commitment to electrification and battery manufacturing is firmly rooted in a strategic industrial and regulatory framework aimed at developing domestic capabilities, minimizing import reliance, and expediting the adoption of electric vehicles across various sectors.

1. Production-Linked Incentives (PLI) and Advanced Chemistry Cell (ACC) Manufacturing

The Government of India has launched a series of production-linked incentive schemes designed to stimulate domestic production of electric vehicles, automotive components, and, importantly, advanced battery cells. Under the PLI Scheme for the National Programme on Advanced Chemistry Cell (ACC) Battery Storage, which was approved by the Union Cabinet in May 2021, a budget of Rs 18,100 crore has been allocated to facilitate the creation of large-scale ACC and battery manufacturing facilities in India, prioritizing substantial domestic value addition and competitive pricing for EV batteries¹. This initiative is technology-neutral, providing participating companies the freedom to choose suitable cell technologies for production.

In conjunction with the ACC scheme, the PLI Scheme for the Automotive and Auto Component Industry offers incentives aimed at enhancing the manufacturing of cutting-edge automotive technologies, including electric and hybrid vehicles, with established minimum domestic value addition requirements intended to draw investment throughout the automotive supply chain.²

These PLI schemes are pivotal to India's comprehensive strategy aimed at diminishing dependency on imported cells and bolstering the entire EV battery value chain.

2. Broader EV-Centric Programmes and Supporting Policies

The Government has also initiated supplementary programmes such as the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme, which provides support for the deployment of electric vehicles across two-, three-, and four-wheeled categories, along with the necessary public charging and testing infrastructure.³

Additional measures like the FAME India programme (Faster Adoption and Manufacturing of Electric Vehicles) have historically provided subsidies for EV purchases and the establishment of charging stations, thereby strengthening the adoption ecosystem. Numerous schemes have allocated resources to expedite the rollout of charging infrastructure and the electrification of fleets in both public and private sectors.⁴

In the Union Budget for 2025–26, further targeted incentives were unveiled, including exemptions from customs duties on capital goods utilized in battery manufacturing and complete duty relief for essential minerals such as lithium and cobalt, all aimed at reducing input costs and enhancing the global competitiveness of Indian battery manufacturers.

3. Regulatory Goals Driving EV Adoption

Regulatory frameworks play a vital role in amplifying EV demand by establishing compliance standards that render electrification an increasingly attractive economic and legal necessity for vehicle manufacturers and consumers alike. While India's emission standards (such as Bharat Stage norms) primarily focus on regulating pollutants emitted by internal combustion engines, broader national commitments to decreasing vehicular emissions have fostered a regulatory landscape that favours battery electric vehicles over traditional or hybrid options⁵. Furthermore, state-level EV policies reinforce central frameworks, creating a multi-layered regulatory momentum for electrification across different regions.⁶

4. Future Regulatory and Policy Enhancements

Emerging policy trends suggest a growing focus on battery lifecycle management, including safe disposal and recycling protocols for lithium-ion batteries, showcasing a comprehensive approach to sustainability within the EV ecosystem. Recent proposals at the state level indicate a transition towards incorporating battery waste management into strategies for EV adoption⁷.

2. Battery Waste Management Rules, 2022: Extended Producer Responsibility

In light of the swift advancement of electric mobility and the increasing utilization of batteries across various sectors, India has implemented a thorough regulatory framework for the management of battery end-of-life through the Battery Waste Management Rules, 2022 (BWM Rules), which were announced by the Ministry of Environment, Forest and Climate Change on 22 August 2022. These regulations replace the previous Batteries (Management and Handling) Rules, 2001, and are applicable to all types of batteries, encompassing electric vehicle (EV) batteries, automotive, industrial, and portable batteries, irrespective of their chemistry, size, composition, or intended use.⁸

1. Extended Producer Responsibility (EPR) Framework

According to the BWM Rules, manufacturers and importers of batteries are categorized as "producers" and are legally mandated to ensure the environmentally responsible management of the batteries they introduce, from the point of sale until the end of their lifecycle. This responsibility is extensive, encompassing both new and refurbished batteries of various chemistries⁹.

2. EPR Obligations

Producers are required to:

2.1 Collect and manage the waste batteries they place on the market through authorized reverse logistics systems.

2.2 Recycle, refurbish, or guarantee suitable end-of-life processing of collected batteries with registered recyclers.

2.3 Achieve phased collection and recycling targets outlined in Schedule II of the Rules, which progressively escalate over time to ensure the attainment of recovery and diversion objectives.

The regulations prohibit the disposal of waste batteries in landfills or through incineration, mandating environmentally sound treatment and recovery of their constituent materials¹⁰.

3. Registration and Compliance Mechanisms

To ensure transparency and enforceability:

3.1 Producers, recyclers are required to register with the Central Pollution Control Board (CPCB) via a centralized online portal.

3.2 Entities that are registered will receive certifications and are obliged to submit periodic compliance returns through the portal.

3.3 The portal also facilitates the tracking of EPR fulfilment, the issuance and transfer of EPR credits, and centralized reporting.

Neglecting to register or adhere to EPR obligations may result in regulatory action and the enforcement of environmental compensation under the polluter pays principle, highlighting the significance of proactive compliance planning.

4. Monitoring, Reporting and Enforcement

The CPCB is tasked with verifying producer compliance through regular audits and inspections. State Pollution Control Boards (SPCBs) assist in the implementation and enforcement, which includes oversight of registration for refurbishers and recyclers. Failing to meet targets, submitting false reports, or engaging in illegal disposal practices could lead to penalties or suspension of registration¹¹.

5. Circular Economy Incentives

The Rules advocate for a circular battery economy by compelling producers not only to manage end-of-life waste but also to promote the reintegration of recovered materials into the production of new batteries over time. While specific minimum recycled content thresholds are still being developed, the policy framework aims to diminish reliance on virgin raw materials, secure essential battery supply chains, and enhance formal recycling infrastructure.

3. Contractual and Commercial Considerations

1. Supply Agreements: Structuring for Regulatory Compliance and Continuity

1. Adherence to the Battery Waste Management Rules, 2022, including Extended Producer Responsibility (EPR) obligations;
2. Registration with the Central Pollution Control Board (CPCB) and the upkeep of valid authorizations;
3. Traceability, reporting, and data-sharing responsibilities essential for tracking EPR credits;
4. Conformance with the continuously evolving technical, safety, and environmental standards relevant to electric vehicle batteries.

From a risk management standpoint, OEMs and downstream buyers are increasingly pursuing audit rights and information commitments to independently validate supplier adherence, especially in situations where non-compliance might expose them to regulatory scrutiny or potential harm to their reputation.

1. 2 Allocation and Continuity Mechanisms

Long-term supply agreements must also prepare for possible market disruptions stemming from compliance-related constraints, which may include:

1. Shortages of recycled materials or secondary raw materials due to constrained formal recycling capabilities;
2. Heightened costs associated with meeting EPR targets, eco-design mandates, or recycled-content requirements;
3. Supply instability due to alterations in import duties, localization thresholds under Production-Linked Incentive (PLI) schemes, or restrictions on sourcing critical minerals.

To mitigate these risks, parties are increasingly integrating price-adjustment mechanisms, hardship clauses, and renegotiation triggers that are specifically linked to regulatory-driven cost increases, rather than solely depending on fixed-price or take-or-pay arrangements.

2. Risk Allocation and Environmental Liability

1. Contracts between OEMs and suppliers, as well as those between manufacturers and distributors, must explicitly outline responsibility for collection, recycling, refurbishment, and regulatory reporting;
2. Indemnities are progressively encompassing regulatory fines, environmental compensation, and enforcement actions resulting from EPR non-compliance;
3. Parties are required to address liability for historical batteries introduced to the market before the start of the contract, particularly in mergers and acquisitions or asset transfer contexts.

In the absence of a clear contractual distribution, regulatory authorities may pursue the entity most visibly linked to placing batteries in the market, irrespective of internal commercial arrangements.

Considering the gradual and evolving character of India's regulatory environment for EVs and batteries, traditional force majeure clauses may prove inadequate. Modern contracts are increasingly making a distinction between:

1. Force majeure events in case of external, unforeseeable occurrences beyond control;
2. Change-in-law or regulatory change events, which include new recycling targets, heightened reporting requirements, or revised localization criteria.

Well-crafted regulatory change clauses typically tackle issues related to the right to cost pass-throughs, extensions of timelines, or renegotiation of commercial terms when compliance substantially impacts the economic balance of the contract. This is especially pertinent in scenarios where phased EPR targets or localization benchmarks under PLI schemes escalate over time.

4. Strategic Legal Considerations

1. Integration of Circular Economy Objectives

As India's regulatory framework increasingly emphasizes battery circularity and resource efficiency, legal strategies must align with the broader environmental and sustainability goals ingrained in policy design.

1.1 Partnerships with authorised recyclers and refurbishers: Establishing formal legal agreements with CPCB-registered recyclers and refurbishers allows producers and OEMs to fulfill Extended Producer Responsibility (EPR) requirements while capitalizing on the commercial value of recovered materials. Such contracts should explicitly outline the scope of services, compliance obligations, traceability, data-sharing, and distribution of regulatory risk, thus facilitating both compliance assurance and the creation of circular value.

1. 2 Intellectual property and technology licensing: The advancement and implementation of innovative battery chemistries, battery management systems, and recycling technologies require meticulous management of intellectual property rights. Licensing and technology transfer agreements must strike a balance between safeguarding proprietary knowledge and meeting regulatory disclosure and collaborative operational needs, ensuring that competitive advantages are maintained without exposing parties to unintended infringement, misuse, or dependency risks.

2. Monitoring Regulatory Evolution

2. 1 Amendments and regulatory guidance: The Battery Waste Management Rules, 2022, along with their associated compliance mechanisms, are subject to continuous refinement through amendments, clarifications, and implementation guidance. Vigilantly tracking notifications, advisories, and directives issued by the Central Pollution Control Board and the Ministry of Environment, Forest and Climate Change is crucial for ensuring timely compliance, adjusting contractual arrangements, and strategically aligning with the evolving policy landscape.

Conclusion

The anticipated surge in India's EV battery demand to around 256.3 GWh by 2032 highlights the swift momentum of electrification and signifies a fundamental shift in both industrial capabilities and environmental regulatory involvement. This growth path indicates not only a rise in manufacturing output but also a more profound incorporation of sustainability principles within the EV value chain. The legal and regulatory landscape, particularly reinforced by the Battery Waste Management Rules, 2022 and associated environmental compliance frameworks, places significant and ongoing responsibilities on producers and various stakeholders throughout the battery ecosystem. As regulatory scrutiny deepens and compliance expectations change, the capacity to effectively weave environmental regulation, risk allocation in contracts, and governance structures into commercial and operational strategies will be essential. Companies that strategically align their legal frameworks with policy goals will find themselves better equipped to seize market opportunities while fulfilling the increased legal and environmental obligations that come with India's swiftly changing EV battery industry.

Footnotes

1 Ministry of Heavy Industries, PIB Delhi, & Varma, B. S. (2025). PROMOTION OF EVS AND INSTALLATION OF EV CHARGING STATIONS https://www.pib.gov.in/PressReleasePage.aspx?PRID=2204630®=3⟨=2

2 ibid

3 ibid

4 Ibid

5 Pti. (2025, December 12). India's EV battery demand to rise multifold to 256.3 GWh by 2032: Report. The Economic Times. https://economictimes.indiatimes.com/industry/renewables/indias-ev-battery-demand-to-rise-multifold-to-256-3-gwh-by-2032-report/articleshow/125929323.cms?utm_source

6 NITI Aayog, Subrahmanyam, B., Agarwal, O. P., Sinha, S. J., Yadav, A. K., Singh, A., Nemade, G., WRI India, WRI India, Nallapaneni, A., & Sanghavi, S. (2025). Electric vehicles in India unlocking a $200 billion opportunity. In R. Gauba,Electric Vehicles in India Unlocking a $200 Billion Opportunity[Report]. NITI Aayog.https://niti.gov.in/sites/default/files/2025-08/Electric-Vehicles-WEB-LOW-Report.pdf

7 Rajput, A. (2025, December 12). Delhi govt to focus on safe battery recycling, disposal in EV policy.The Times of India.https://timesofindia.indiatimes.com/city/delhi/delhi-govt-to-focus-on-safe-battery-recycling-disposal-in-ev-policy/articleshow/125938254.cms?utm_source

8 (Government Notifies Battery Waste Management Rules, 2022, n.d.) https://www.pib.gov.in/PressReleasePage.aspx?PRID=1854433&utm_source®=3⟨=2

9 EPR battery. (n.d.). https://eprbattery.cpcb.gov.in/

10 (Government Notifies Battery Waste Management Rules, 2022, n.d.-b)

11 AUJLA, G. S., MINISTRY OF ENVIRONMENT, FOREST AND CLIMATE CHANGE, & SINGH, K. V. (2025). Disposal of waste batteries.Lok Sabha.

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