China’s Battery Policy Shift Could Push Up EV Costs in India

Summary: Cutting export rebates and rising lithium prices may squeeze India’s EV makers and bump up car prices.

A quiet but important change in China’s battery policy is rippling outwards — and India’s electric vehicle industry is starting to feel it.

China recently announced it will reduce and eventually phase out export tax rebates on lithium-ion batteries, bringing them down from 9 % to 6 % from April 1 and to zero by January 1 next year. Simultaneously, the costs of essential raw materials like lithium carbonate have surged, finishing 2025 over 50% higher than at the beginning of the year.

For Indian EV makers, the timing couldn’t be trickier. Batteries account for more than a third of the total cost of an electric vehicle, and any uptick in cell prices directly affects how affordable these vehicles can be for buyers.

Many Indian manufacturers depend heavily on imported lithium-ion cells from China and other Asian suppliers. With rebates shrinking and material costs climbing, the landed cost of batteries — and therefore of EVs — is expected to rise unless battery producers choose to absorb the extra cost themselves.

An executive involved in EV battery procurement told industry media that markets are bracing for this shift in the coming weeks, with some companies stocking up on inventory before the rebates are cut. Smaller EV makers that rely on short-term battery purchases or spot deals may be most vulnerable, while larger players with long-term contracts could weather the change better.

This development comes at a sensitive point for India’s EV market. Earlier policy support — including tax advantages for EV buyers — has narrowed as GST on conventional vehicles dropped, shrinking the gap that once made EVs relatively more attractive.

Industry analysts also point to currency swings and rising input costs as compounding pressures on EV battery prices. For example, broader market data suggests the weakening of the Indian rupee and rebounds in raw material costs have already added nearly 10–12 % to battery cell prices for Indian buyers in recent months.

India is working to build its own battery ecosystem. Government schemes aim to boost domestic production capacity and encourage localisation of critical components such as graphite anodes and cathodes. But the reality remains that most cells — and much of the raw material supply — still come from overseas, leaving local makers exposed to global policy shifts like China’s export rebate changes.

For EV buyers, the result could be higher upfront prices if manufacturers pass on part of the battery cost increase. For the industry, the situation underscores the importance of speeding up local battery production and supply chain diversification so that India isn’t overly dependent on a single source for a technology that’s central to its clean-mobility goals.