News emerged in mid-May that Reliance Industries Limited (RIL) was involved in discussions with Chinese battery company CATL to procure components for big battery systems for its upcoming facility in Gujarat.[1] Announced in 2021, the facility seeks to indigenously manufacture lithium iron phosphate-based battery (LFP) chemicals, cells, and packs, along with containerised energy storage solutions and recycling.[2] LFP batteries are used in electric vehicles, solar and wind energy grids, telecommunications infrastructure and data centres for uninterrupted power services.
China’s Stranglehold on the Battery Manufacturing Ecosystem
However, over the last five years, RIL’s ambitious plans have been pushed back due to lack of access to technological know-how in producing lithium-ion battery cells. The Indian company’s negotiations with CATL and Xiamen Hithium Energy Storage to acquire technology licencing were unsuccessful due to China’s restrictions on technology transfer. Forced to scale down ambitions, RIL is shifting focus to packaging Chinese pre-made cells into big battery systems. For a parallel, this is similar to the smartphone production model – final assembly, test, and pack out, with components shipped from China.
However, the Beijing’s updated controls on export of technology since July last year now extend to battery systems and components, thus derailing even these alternate plans by RIL.[3] In fact, a closer look at India’s battery storage ecosystem in the last five years reveals that all major domestic conglomerates share the same story of restricted access to components and technology licensing.[4]
China’s dominance in global industrial supply chains extends to the clean and renewable energy industry. The Chinese Party-state has weaponized this dominance, expanding its repertoire by establishing new legal frameworks to shield its citizens and entities from foreign sanctions,[5] safeguard its industrial supply chains,[6] and govern overseas foreign direct investments.[7]
Domestic Weaknesses and Incapacities: Big Business and the State
Structural asymmetry and dependence of Indian industry on Chinese expertise, components and technology are characteristic features of India-China economic relations. In spite of the downturn in bilateral relations after the Galwan incident in 2020, these features have remained constant.[8] However, the focus on China cannot hide India’s own domestic economic weaknesses and lack of capacities that require structural reforms. Of particular interest is the role of private capital and big business.
India’s big capital has not pulled its weight in the country’s industrial development and transformation. According to the Government of India’s Economic Survey 2025-26, the business sector’s contribution to Research & Development (R&D) is 41 per cent of the total expenditure compared to 77 per cent in China and 75 per cent in the USA.[9] The lack of investments in R&D and aversion to taking risks – in this case, in battery systems – leaves procurement by Indian companies to the mercy of both Chinese manufacturing firms and their government.
Volatility in the international political economy and geopolitical uncertainties require Indian industry to take more risks and adopt long-term strategic thinking for survival.[10] Yet, despite their strong balance sheets and the government’s high capital expenditure facilitating infrastructure development, Indian corporates have lacked will and enthusiasm in sharing in the burden of development.[11]
The increasing diversification of Indian business portfolios into sectors other than manufacturing - retail/ecommerce, entertainment and hospitality to name a few – puts profit maximization at the forefront than long-term national interests in industrial manufacturing. The government’s privileging of a few big industrial houses as national champions has further skewed India’s industrial trajectory, leading to the phenomenon of precocious development – where growth relies heavily on skill-intensive services and a small number of massive, entrenched firms rather than broad-based labour-intensive manufacturing.[12] Even the manufacturing ecosystem exhibits a bifurcated structure, dominated by low-productivity micro-enterprises and a handful of large firms, with an underdeveloped layer of medium-sized enterprises, termed by economists, as the ‘missing middle’.[13]
Chinese Experience for Reference
There are Indian startups in battery systems making efforts to produce cells from scratch and this includes producing purpose-built machinery for the process. However to scale up, they need recognition, easier access to bank credit and regulatory as well as infrastructure support from the government. Opening of a new factory is celebrated as industrialization in India, when the need is to view it as a layered, coordinated process. Rather than isolated factories and plants, advanced manufacturing economies are built around linkages between skilled workforces, local suppliers, universities as knowledge incubators and firms making long-term investments.[14] China is a ready reference for such wholistic innovation under the Party-state’s strategic vision.[15]
Successful Chinese companies today, like Geely and Chery, emerged through intense competition among many firms, local experimentation, and decentralized provincial initiatives.[16] Mutually beneficial partnerships between entrepreneurial local governments and non-state manufacturers led to commercial success which was later nationally replicated by the central government.[17]
India’s advanced manufacturing and industrial transformation requires on a re-framing that is federal as well as provides a level playing field for all sizes of firms, not just the big players.
This article was originally published in The Tribune as part of an arrangement with the Centre of Excellence for Himalayan Studies.
[1] https://www.bloomberg.com/news/articles/2026-05-19/reliance-in-talks-with-catl-others-for-big-battery-system-parts
[2] https://www.ril.com/businesses/new-energy-materials
[3] http://english.scio.gov.cn/m/pressroom/2025-07/16/content_117980520.html
[4] https://swarajyamag.com/tech/from-cell-maker-to-box-packer-how-indias-conglomerates-have-retreated-in-face-of-chinese-tech-denial
[5] https://www.gov.cn/zhengce/content/202604/content_7065398.htm
[6] https://www.gov.cn/zhengce/content/202604/content_7064837.htm
[7] https://www.gov.cn/zhengce/content/202606/content_7070755.htm
[8] https://snu.edu.in/centres/centre-of-excellence-for-himalayan-studies/research/asymmetry-and-interdependence-indias-economic-relations-with-china-post-2020/en/
[9] https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf
[10] https://indianexpress.com/article/opinion/columns/indian-industry-quarter-artificial-intelliegnce-trump-10736756/
[11] https://www.indiabudget.gov.in/budget2025-26/economicsurvey/doc/echapter.pdf
[12] https://www.mercatus.org/ideasofindia/arvind-subramanian-and-devesh-kapur-indias-precocious-development-odyssey
[13] https://www.epw.in/journal/2020/16/special-articles/‘missing-middle’-problem-indian-manufacturing.html
[14] https://swarajyamag.com/commentary/indias-industrial-future-depends-on-the-boring-stuff
[15] https://www.sciencedirect.com/science/article/pii/S2096248718300092