The battery wars: India’s China challenge

Over the last few years, economies in major countries and individual businesses have seen significant volatility. With the two wars in Ukraine and the Middle East, the disruptions caused by Trump’s tariffs, and the threat of AI changing entire industries. Add to this the political unrest among young people in the US and Europe, in our neighbours Bangladesh and Nepal, and now at home with the Cockroach Janta Party, with overlapping concerns like inflation, slow or no job growth, unaffordable housing, etc. Yet countries are showing high growth and the rich everywhere get richer.  Volatility seems to be the new normal.    
Yet at another level, most established businesses and industries are focused on their day-to-day running, increasing production and sales, finding new markets, while at the same time looking ahead with improvements in technologies. Corporate India is having a good run with booming stock markets, and many established players are seeing levels of business, at least domestically, that they have not seen before. 

Amara Raja Energy and Mobility Ltd (formerly Amara Raja Batteries Ltd) is amongst the top two players in the lead-acid battery space. Founded by 90-year-old Ramachandra Naidu Galla, it is now led by his son Jayadev, 60 and his grandchildren. Starting with the conventional lead-acid battery, but for industrial use, Galla focused, right from the beginning, on introducing technology advances that had come into use in the US. He was the first to introduce sealed, maintenance-free batteries which allowed modular stacking. This was exactly what the then new, high-growth telecom sector needed. And it was only after other manufacturers entered the telecom sector that Amara Raja moved into conventional automotive batteries. 
In this time’s cover story, Sajal Bose explores Amara Raja’s growth and its more recent shift into lithium-ion cells, which power all electronic gadgets. Lithium-based cells are the driving force behind all electric vehicles (EVs).  How fast and whether EVs will overtake internal combustion engines (ICE) is a matter of intense global debate, with ICE engines pushing back heavily in Europe and the US. But EVs will continue to be a very important and major segment of the market. Amara Raja has made an aggressive push into automotive cells by establishing a 300-acre Giga corridor in Telangana. But when Indian firms attempted to establish joint ventures or obtain comprehensive technologies from major Chinese manufacturers, they were stalled by export controls and unofficial diplomatic embargoes.

The Chinese initially got technologies from the US, Japan and Korea. But very quickly, they focused on transforming niche production technologies into large-scale industrial manufacturing of the products. This in turn allowed them to crash prices, thus hollowing out many a Western or East Asian competitor. For example, in thin film separators that keep the anode and cathode apart, Chinese manufacturers crashed prices by 90 per cent. So also, in X-rays that are crucial for mass scanning of lithium-ion cells for defects, and equipment for testing cells, the Chinese, with production technologies, are the leaders. All these technologies and equipment are virtually embargoed for India. This is one of the main reasons that, in spite of incentive schemes, we have produced less than 5 per cent of the battery manufacturing capacity the government had projected.

Whether we can start catching up with China and develop an all-round battery manufacturing capacity (as opposed to just assembling Chinese-made parts) is dependent not only on the big Indian companies like Amara Raja, but also on bold start-ups.