Page 65 - Policy Economic Report - March 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Impact on EV due to policy changes in China pertaining to lithium

As per information received from Society of Indian Automobile Manufacturers (SIAM), India currently
has a high import dependence on critical minerals such as lithium, which are essential for lithium-ion
batteries used in electric vehicles (EVs). The entire current demand is met through imports, making the
sector sensitive to external shocks. Recent policy developments in China, specifically the decision to
impose export controls and licensing requirements on high-performance Lithium-ion batteries (=300
Wh/kg), cathode materials, artificial-graphite anodes, and associated manufacturing technology, could
tighten near-term global supply conditions. This creates potential supply-chain vulnerability for Indian
EV manufacturers who rely on Chinese midstream processing

Lithium and other battery raw materials are globally traded commodities, and their prices are influenced
by international demand-supply conditions. Any global policy changes or supply disruptions may lead to
price fluctuations in lithium, cobalt, and nickel. The export controls announced by China have the
potential to elevate global component prices in the near term, directly influencing the cost structure for
Indian EV companies. However, the overall impact on battery prices is also influenced by technology
improvements, economies of scale, and the localization of manufacturing.

The Government has taken various steps to reduce import dependence for critical minerals. The Union
Cabinet has approved the National Critical Mineral Mission (NCMM) on 29th January, 2025 to secure a
long-term sustainable supply of critical minerals (including lithium) and strengthen India’s critical
mineral value chain encompassing all stages from mineral exploration and mining to beneficiation,
processing, and recovery from end-of life products. Additionally, the following initiatives have, inter-alia,
been taken to strengthen the critical mineral sector in the country: -

i. The Union Cabinet approved the National Critical Mineral Mission (NCMM) on 29.01.2025 with
the objectives of securing India’s critical mineral supply chain and strengthening the critical
mineral value chains.

ii. Since the amendment to the MMDR Act in 2023, Central Government has successfully auctioned
46 blocks of Critical and Strategic Minerals. In addition, 7 blocks have been auctioned under the
Exploration Licence regime, out of which 3 are critical mineral blocks.

iii. The Union Cabinet has approved a Rs.1,500 crore Incentive Scheme to promote critical mineral
recycling. The Scheme Guidelines were issued, and the Scheme was launched on 02.10.2025.

iv. Guidelines for funding pilot projects for the recovery of critical minerals from overburden/
tailings/ fly ash/ red mud, etc. were issued on 14.11.2025.

v. The Government has recognized nine premier institutes as Centres of Excellence (CoEs) under
the NCMM to carry out Research & Development (R&D) for strengthening domestic capabilities
in the critical mineral value chain.

vi. KhanijBidesh India Limited (KABIL), under Ministry of Mines, has signed an Exploration and
Development Agreement with CAMYEN, a state-owned enterprise of Catamarca province of

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