The Chinese whispers in India’s EV batteries

In today's episode, we'll do one deep dive and cover another story for the day. First we'll talk about the Chinese whispers in India's EV batteries, and then we'll talk about why India's airlines want cheaper fuel. Welcome back to the Daily Brief by Zeroda, where we cut through the noise to help you understand what's actually happening in the most important stories from business and markets. I'm your host Akshira, today is Thursday, 8th October. Coming to the first story, so this year India's largest conglomerates tried to make a lot of noise regarding EV batteries, but somehow each of their noises showed the same pattern. For instance, in early 2024, JSW announced plans for a 50 gigawatt or sell gigafactory using technology from a Chinese partner, but this year, JSW halted those plans because it hinted that acquiring such a license was too much trouble. Data's battery arm, Agratas also tried to license Chinese technology, but they realized they couldn't make it work and then decided to develop their own. Meanwhile, a somewhat expected entrant in reliance also announced that it was building a large sell factory in Jammnagar, Gujarat, but as per Bloomberg, it turns out that they too had also hit a block with a potential licensing deal with a Chinese partner. Now, it's no secret that India has been trying hard to move up the value chain in EV batteries, so year ago, we covered Ashok Lailan's Rs. 5000 crore deal with China's CALB, one of the world's largest battery cell makers. The long-term goal was to eventually build the cells within the batteries themselves. Similarly, Amarajah had struck a deal with another Chinese company, Goshen, and XI with S-Wolt. However, tech transfer deals have always been tricky to execute, more so if the fund company giving the technology is based within the jurisdiction of a geopolitical rival. Now we are trying to navigate this complexity, is the story we'll be telling you today. First, let's explore what it means to even make an EV battery. So, an electric car battery is a pack made up of hundreds or even thousands of cells, along with cooling systems, electronics and software to manage them. Making these packs isn't easy, but Indian companies already know how to do it. Data, Mahindra and Aether, for instance, make battery packs in India using cells bought from elsewhere, Ola is an exception, which we'll come to later. But even harder than the pack is making the cells that go inside it, and building a cell factory isn't the hardest part either. The real challenge is learning how to make millions of cells that perform the same way last long and remain cheap. That requires a lot of trial and error, constant iterations on the factory floor and lots of practice. For every batch of cells you make, some will go to waste, and the purpose of those iterations is to reduce that. Chinese and Japanese companies have spent years, even decades getting better at this, while we are only beginning. So merely buying the license to the technology isn't enough. Learning the actual know-how takes a lot more practical effort beyond the manual that explains how to make cells. This is called tacit knowledge, and we'll explain later with an example how crucial it is. So even if Indian companies learn to make cells, there's another problem. They still need the materials that go inside them, and India imports most of those too. India's rare dependence on China is well known, so we won't be discussing it this time. Now India has been trying to speed things up within incentives. We have an 18,100 crore rupee advanced chemistry cell PLI scheme that pays firms to set up large battery cell factories. The target is 50 gigawatt hours of capacity, which is enough cells to store 50 billion watt hours of energy, of this 40 gigawatt hours has been awarded, and the remaining 10 gigawatt hours is being tendered. But as of June 2026, only 1.4 gigawatt hours was actually up and running, and all of it from Ola. Plenty of factories are planned, but very few are in operation. Which brings us back to the main problem Indian companies are stuck on, and the one country that we're dependent on to solve it. Now most of the expertise required to make advanced cells at scale is held by Chinese companies. Today China makes roughly 80% of the world's battery cells, and more than 90% of its LFP cathode material. So unfortunately getting access to their knowledge has only become much harder over the past year, at least partly because of China's own policies. Now it's not like China has stopped sharing battery technology altogether, but the restrictions are more selective than that. China appears to be drawing a line around some of its more advanced manufacturing know-how while older technology is still more transferable. For instance, in July 2025, China added some parts of LFP cathode making technology to its restricted export list. And the rules use technical cutoffs to decide what exactly is restricted. So put simply, some of the know-how used to make the highest generation of LFP batteries now needs government approval before a Chinese company can share it abroad. But less advanced generations actually fall outside these restrictions. China went further in October announcing broader controls across industries, and then in November it suspended those rules, but the restrictions introduced in July remained. Now another measure that China has used to hamper tech transfer is limiting the mobility of its engineers that we'd need to help us with setting up factory processes. Take Amarara's deal with Chinese battery maker quotient. So Chinese engineers were supposed to help Amarara set up the machines, put quality control processes in place, and train its Indian employees. But one of the biggest bottlenecks they highlighted in that deal was the inability to quote Chinese engineers. That hurt their ability to absorb the tacit knowledge embedded in manufacturing. Now if you recall, this is not very different from when China called back its engineers from Foxconn's factories in India last year. And on top of all of this, there's pressure from the Chinese state on Chinese companies to scale down licensing of technologies, not just in India, but to any other country. In 2024, China's commerce ministry reportedly held a meeting with their domestic automakers regarding the risks of making overseas investments. And it's ignored India in particular, while also advising strongly against investing in Russia and Turkey. Beyond this, there's also the problem that all tech transfer deals face regardless of which countries are involved. What is the incentive for a company with the technology to teach us how to use it? After all, the moment you give the license away, you create a potential competitor. So the licensing firm's incentive is to teach the license only as much as it's needed to run a factory and no more. Meanwhile, the licensing firm also gains access to the market of the licensee, which is why they enter a deal in the first place. As we've covered before, given China's domestic sales, plateauing, they have a particular interest in gaining access to the Indian market. Of course, our own policies with Chinese investments make things harder, which ensured that Chinese companies face an extra layer of scrutiny before investing here. BYD for example, proposed a $1 billion EV plant in India in 2023, but the plan did not get government approval. So India eased the rules slightly in 2026, for small Chinese takes in Indian businesses, but bigger investments still need approval. Now even within this context, different companies have taken very different routes to the same problem. We'll be looking at a few of those. First comes JSW. So on 26th August this year, JSW passed its sell gigafactory, and it linked its inability to find a Chinese partner for LFP batteries to China's tighter controls. JSW was ready to build the factory, but couldn't get the know how needed to make sales at scale. Four weeks later, JSW launched its electric trucks and buses from a plant in Maharashtra capable of producing 15,000 vehicles a year. The vehicles are engineered in India, the software is developed here, and the battery packs are assembled here. But the cells inside those packs still come from elsewhere. And then on 28th September, JSW committed over Rs. 800 crore to a battery research centre with COEP Technological University in Pune. The centre will work not just on lithium-ion cells, but also sodium-ion cells, which are relatively more unexplored even on China's part. So over a few weeks, you could see JSW's approach change. It first tried to get the technology from an established Chinese player, and when that didn't work, it started investing in developing the knowledge itself. In the meantime, JSW can build an electric truck in India and assemble its battery pack here. Tata, meanwhile, is taking a different route. Agratas, its battery company subsidiary, is building a 20-gigawattar cell factory in Saadamth, Gujarat. And the first production equipment started arriving in September 2026, the factory is expected to start making sales in 2027. But, Tata isn't using the same approach for every type of battery. While it found a technology partner for one form of battery chemistry, it failed for another. For the NMC or Nickel-Manganese cobalt chemistry, Agratas' license technology from AESC Apollo, which is a Japanese firm that's now majority owned by China's envisioned group, and the deal saves Tata the effort of developing the technology from scratch. But we don't know how far that gets Tata on its own. The details of the deal aren't public, so it's unclear whether, once the licensing deal is over, Tata will eventually be able to produce these cells independently or continue to rely on AESC. Now, with LFP, Agratas didn't even have the option to license. It couldn't find a Chinese company willing to share it. So, Agratas. is now trying to develop the LFP manufacturing process itself. Perhaps the most interesting move in battery sales came from a company which is known neither for cars like Tata nor for batteries like X-Z but it does understand chemicals very well while also having some of India's largest cash reserves. Those facts have allowed reliance to do something no other Indian company has tried. So reliance decided to buy the firms that own the technology itself and that's certainly more durable than renting it. For instance in March 2022 reliance acquired almost all of lithium works for approximately 61 million dollars which is approximately rupees 464 crore with one dollar being at rupees 78.6. This acquisition gave it a portfolio of 219 LFP patents, a manufacturing facility in China, existing employees and three decades of accumulated process technology and then in 2021 it had agreed to buy sodium ion specialist Faradion for about 100 million pounds which is approximately rupees 1000 crore with one pound at 100 rupees. But despite these moves as per Bloomberg reliance was seemingly looking for another partner that to a Chinese one. In January 2026 Bloomberg reported that reliance had been trying to license LFP technology from China's Hithium but the dogs had stalled and its cell making plans were paused. And what reliance has said is that its battery project is progressing and is on Shedium. Its FY26 annual report said its Germanical battery factory was near in completion with 40 gigabird hour of capacity planned. But what we still don't know is exactly whose technology those cells were used or why reliance was trying to look for another partner in China. Perhaps buying battery technology doesn't necessarily end the search for better technology. Now beyond these three, a few more companies in India have their own strategies to skirt around China's dominance. For instance, there's Ola which decided to develop its own cells from scratch. Its 4680 MMC cell is already used in its scooters while its newer 4600 LFP cell has received BIS certification. While this marks significant progress from mere assembly, Ola still imports active key materials like the cathode and anode. And then there's Maruti, whose elite trajectory we've covered in a recent story. So Maruti imports the entire battery pack for the evitara from BYD. That saves Maruti from having to develop cells or even battery packs itself, but makes it dependent on BYD. Now what's clear is that announcements about large cell factories are easy and quite abundant. But as far as making those factories operational at high efficiency goes, there's still a long way to go unless the underlying policy situation changes dramatically. So Tata will be one of the first big tests with its sound and factory expected to start producing cells in 2027. JSW's research center may not produce commercial cells anytime soon, but it should show whether Indian companies can build more of this technology themselves. Ola meanwhile will test whether doing almost everything in-house can work at scale, and Maruti will show how far a company can go by relying on an established foreign supplier instead. For all the sources mentioned in this video, don't forget to check out our newsletter. The link is in the description. Coming to the second story. If you're working an indigo flight for the festive season, you already know how expensive it can be. Now there's a fresh addition to the bill. From October 6th, the airline increased its fuel surcharge by Rs 100 to Rs 350 on domestic flights, taking it to Rs 375 to Rs 1,300 per sector depending on distance. Indigo first introduced the charge on March 14th, revised it from April 2nd, and now has raised it again, and even international passenger space higher charges. Behind the decision is another jump in the price of aviation turbine fuel or ATF, which powers aircraft. In Delhi, it reached roughly Rs 137 a litre on October 1st, which was about 13% above the previous month, and nearly 25% above July. The government is now reportedly considering reviving Rs 10,000 crore scheme to protect airlines from these swings, but there's just one complication. It offered that protection a few months ago, and no airline signed up. So to understand why we need to start with the fuel bill. So India refines virtually all the ATF it consumes and exports a substantial surplus. Yet airlines don't pay the domestic cost of making it plus a margin. So oil marketing companies or OMCs use an international jet fuel benchmark called MOPEG or mean of flats Arab Gulf, and it reflects prices in the Arab Gulf market. The logic is simple. Fuel is traded globally, so its price here reflects what buyers would pay elsewhere. So the calculation starts with what it would cost to import that fuel, the international price, shipping, insurance, and applicable import charges. This is called import parity pricing, and it applies even when the fuel was refined in India. That dollar price is converted into rupees and local delivery costs and supplier margins are added, and then come taxes. ATF is outside GST, so airlines pay central access in state vat. Vat rates vary by state, which helps explain why the same fuel costs different amounts at different depots. So the bill depends on three things. Global jet fuel prices, the rupee, and local costs and taxes. So jet fuel prices rose sharply at the start of the year, eased and are now back near the highest scene earlier this year. But jet fuel and crude oil don't always move together. Now crude must first be refined into usable fuels, and the gap between crude and jet fuel prices is called the crack spread. When jet fuel becomes scarce, its price can rise much faster than crude, widening that gap. Now the Federation of Indian Airlines or FIA, which represents Air India, Indigo, and Spice Jet, says this gap has become unusually large. In its submission to the government, it cited a spread of roughly $60 a barrel against the usual 10 to 12 dollars. The West Asia conflict has added other pressures, and a weaker rupee makes aircraft leases and maintenance more expensive because many of those expenses are dollar linked. Air space restrictions force detours on affected international routes, increasing fuel consumption and crude costs, so airlines can end up paying more for each liter while needing more liters to complete the journey. We saw the financial consequences in our earlier story on Indigo's results. In April June, its revenue from operations grew nearly 20 per cent, but its fuel expense rose about 86 per cent. The airline reported a Rupees 238 crore net loss compared with a Rupees 2176 crore profit a year earlier. Those results captured the earlier shock before October's increase, but even then, we were worried the next quarter could be worse. Now normally, the market-linked fuel pricing would mean international price increases are passed on to airlines and, in turn, customers. During the crisis earlier this year, the government interrupted that process. So on April 1, it limited the increase in 80 of base prices for domestic operations to 25 per cent, despite international benchmarks indicating a rise of over 100 per cent. That softened the hit to airlines, but it left OMCs absorbing the price cap. By June, the government acknowledged that this was unsustainable, and the cabinet approved a separate price stabilization mechanism backed by up to Rupees 10,000 crore in interest-free advances to OMCs. So participating Indian airlines would receive fixed-price fuel for domestic and international operations, and the proposed selling price in Delhi worked out to approximately Rupees 115 a liter after charges in taxes. Let's take a simplified example, keeping taxes and other charges unchanged. So if the comparable market price rose to Rupees 135, the airline would still pay 115 Rupees with the government advance financing the 20 Rupees difference. But if it later fell to 100 Rupees, the airline would continue paying 115 Rupees while the OMC used the 15 Rupees difference to repay earlier advances. So the basic bargain is predictable prices in exchange for giving up some benefit when fuel became cheaper. Now participation also required an exclusive supply arrangement with OMCs. The scheme would run for up to 36 months, subject to annual review or earlier settlement once the advance was recovered, and an extension could be approved if recovery remained incomplete. But for airlines, the timing made this difficult to accept. The 115 Rupee Delhi price was already above the prevailing price in June, July when the government clarified the terms, and as international prices eased, committing to that arrangement became less attractive. According to the Indian Express, no carrier joined within the prescribed window and the scheme lapsed. But now prices have risen again and there is renewed interest. But that doesn't automatically reserve the objections to the original offer. That is why FIA's requests go beyond reviving the fund. So first, it wants cost plus pricing. Fuel priced at its actual cost plus a reasonable margin instead of international jet fuel benchmarks. And the aim is to reduce exposure to unusually wide crack spreads. Now this would require deciding which costs count and what margin is reasonable. And refineries produce several fuels together, so working out how much of the cost belongs to jet fuel isn't straightforward. And then come taxes. So ordinary domestic 80 of supplies attracted 11% central excise, followed by applicable state vat. But because excise is a percentage the tax amount rises with the underlying price. On a hypothetical taxable value of 100 rupees, it's 11 rupees and at 120 rupees it becomes 13.2 rupees even though the government hasn't changed the rate. That can compound the increase because it's calculated on a price that includes excise. So FIA wants a fixed levy instead and that would prevent excise from automatically climbing with fuel prices although the relief would depend on the amount chosen. It also wants Delhi and Maharashtra's temporary vat concession continued and lower rates in states including Karnataka, Tamil Nadu, Telangana and West Bengal. Now bringing ATF under GST offers another possible route but the benefit would depend on both the rate and the input tax credit rules which decides whether airlines could offset tax paid on fuel against tax collected on their services. And simply moving ATF into GST would not guarantee full credit. Now beyond fuel FIA has asked for an extension of the earlier 25% reduction in landing and parking charges for domestic flights but that concession expired in July according to the association. These requests would lower airlines bills but also reduce government or airport revenues. Airlines are doing that but recovering the entire increase is harder. For one, many tickets are sold well before departure so a fuel price increase can arrive after the airline has committed to carrying passengers at previously agreed fast and FIA has pointed to this mismatch in its appeal for relief. There are also limits to what new passengers will pay. According to IITA's August report India's domestic revenue passenger kilometers fell 7.5% year on year. This measures the distance travel by paying passengers and is a useful proxy for a man. And for the second consecutive month India recorded the largest decline among the world's major domestic markets. But those figures don't tell us how much of the decline was caused by higher fuel prices but they do show that airlines were already filling a smaller share of their capacity and further fare increases could make that harder. The pressure also explains their request for faster disbursement under the emergency credit line guaranteed scheme 5.2. So the scheme targets Rs 5,000 crore in additional airline credit with government backed guarantees covering 90% of eligible lenders exposure to default. Now airlines still have to repay the loans but this can help them meet immediate bills but borrowing cannot permanently fix a route that costs more to operate than it earns. FIA has warned that without timely relief carriers may withdraw from unviable routes for passengers that could mean higher ticket prices and fewer flight options. The aviation minister has confirmed discussions with airlines and OMCs but revised stabilization terms have yet to be announced. So the next offer will have to settle some difficult questions. How long must airlines commit? How much benefit can be retained when prices fall? And if fuel stays expensive, who pays for support that cannot be recovered? Last time, airlines decided the certainty on offer wasn't worth the commitment. A revived scheme will need to give them a reason to decide differently. Now coming to the tidbits. One, Paramount Skydance has completed its take over of Warner Brothers Discovery creating a new entertainment giant called Skydance. The combined company brings HBO, CNN, CBS, Paramount Plus, Warner Brothers and major franchises such as Harry Potter and Game of Thrones under one roof. The deal closed after months of legal challenges over competition and consolidation. The cabinet has approved a Rupees 10,000 crore SME growth fund to provide long-term equity capital to small and medium businesses looking to expand, invest in technology or enter global markets. It's also created a new transport and logistics authority that will prepare a long-term national master plan and coordinate projects across roads, railways, ports and aviation. The civil aviation ministry has asked MIA to defer its plan to shift 265 of Mumbai Airports 717 weekly international flights to Navi Mumbai by October 25. MIA will now have to consult airlines and other stakeholders and come up with a jointly agreed transition plan before seeking regulatory approvals. 4. The government may invite Taiwan's ITRI and Singapore's AESDA to establish semiconductor trading centers in India, potentially funding their setup. The aim is to create a ready pool of engineers and shop flow workers as new chip plans come online. Under the second semiconductor mission, India wants to train another 100,000 engineers over six years. 5. The RBI has raised the repo rate by 25 basis points to 5.5%. Its first hike in nearly three and a half years as inflation pressures rise. It's also shifted its policy stance from neutral to calibrated tightening, signaling that rate cuts are unlikely soon. The RBI raised its FY27 real GDP growth forecast to 7.1%. That's all the news I have for you. Thank you so much for watching and see you in the next one.