Existing power dynamics in the global renewables manufacturing industry have reignited a fierce competition between China, and the West. This is not only due to China’s overwhelming lead as the foremost producer of batteries and refiner of the raw materials needed for them in the world, but also the discrepancies between Chinese and Western business practices. Recent news of a relationship being established between Indian manufacturer Reliance Industries and China’s Xiamen Hithium Energy Storage Technology Co are placing the prospects for the development of a healthy Indian domestic battery industry in the crosshairs.
Environmental, social and governance-related (ESG) considerations and transparency above all are increasingly required for business dealings with Western markets, from sourcing and refining processes, to the manufacturing and export of finished products. With its home-grown battery-producing industry still in its infancy, India has to make a choice between being a part of the Chinese battery industry or, alternatively, ensuring access to Western markets alongside the economic opportunities that come with that. Far from being alone with the latter choice in Asia, South Korea and Japan have already decided that Western alignment best serves their interests, making the potential coalition of ethical battery producers even stronger.
In fact, Japan and South Korea have been leading export trends by providing the majority of car battery sales in the West. In 2024, 60% of car batteries sold in the European Union in new electric vehicles were sourced from South Korea. In the same year in the United States, South Korea provided an astounding 47% while Japan supplied 35% of all new batteries. The EU alone is expected to make up nearly 20% of global battery demand by 2030, making it a both desirable and necessary export market for India’s growing manufacturing ecosystem.
China is nevertheless still the most competitive producer globally, due to its extensive manufacturing capacity and technological know-how, its completely integrated supply chains that include all steps from mining to export, as well as unrivalled labor costs. On the other side of this coin, however, are serious issues related to opacity of governance structures, respect for intellectual property, the violations of workers’ rights, and the causing of significant, irreparable, environmental damage.
With news emerging of potential collaboration between Indian companies and Chinese battery producers, this issue could not be more pertinent to the future of the Indian battery industry. For example, a potential licensing deal that would see Indian manufacturer Reliance Industries cooperating more closely with China’s Hithium is being reported, leaving India’s private sector at a crossroads of sorts.
Hithium is known to be closely associated with both the People’s Liberation Army and the Chinese Communist Party, inextricably linking the company to Chinese state interests, which more often than not, are hostile to Indian economic interests. The collaboration is not a new, or a hidden one, with shipping records examined from 2024 identifying an increase in both volume and frequency of cooperation between the two companies. The value of the shipments, which consisted of battery components being sent from Hithium in China to Reliance in India, was in excess of 4 million dollars, according to the records. It remains unclear why Reliance, a company so heavily integrated into the Indian economy, would not be concerned about the risk that affiliation with a Chinese entity the likes of Hithium, poses not only to the integrity of their company, but also to the future of the battery industry in India more generally.
China has come under loud international criticism for allegedly using the forced labor of its Uyghur Muslim minority in Xinjiang province. In addition to the auto industry, some estimates purport that 96% of solar modules produced globally may be tainted by Xinjiang’s forced labor due to the polysilicon supply chain. Despite or perhaps because of the scrutiny, China’s industrial governance practices have become even more opaque, making it difficult for foreign actors to inquire about human rights issues.
In another example in the DRC, the world’s largest source of cobalt and copper, and a leader in lithium among other mineral reserves, the IMF flagged an agreement of Sicomines, a project led by a Chinese consortium of investors, for transparency issues regarding fiscal returns. The DRC itself has been investigated on the basis of reports that forced evictions and violence routinely accompany its cobalt mining industry.
Environmental issues have also been raised in connection with China’s supply chains in Africa. From the DRC, Zimbabwe and Mozambique to Madagascar, Chinese companies have been accused of contaminating water supplies and ignoring waste management requirements. China’s Molybdenum was found to have contaminated rivers in the DRC with cobalt and uranium, while Huayou and Sinomine likely triggered deforestation and dust pollution in Zimbabwe, among other examples.
These issues are close to home for India, whose population has already suffered greatly due to air and water pollution, waste, and deforestation. ‘Clean water and sanitation’, the quality of ‘Life on Land’, ‘Good Health and Well-being’ and ‘Responsible Consumption and Production’ are, in fact, UN Sustainable Development Goals. These goals are simply incompatible with industrial production practices that ignore not only the environment, but also people.
Such issues are part of the reason why the EU decided to put large emphasis on traceability and due diligence obligations in the battery, solar power, and other renewables-related industries. The EU Battery Regulation demands ethical labor force participation and working conditions, and also requires the disclosure of carbon footprint and recyclability. Adopting similar legislation might be attractive to Indian lawmakers.
The building of transparent and ethical supply chains is a difficult task, primarily because there are limited opportunities for the emergence of any independent supply chain outside of the orbit of China’s influence. Although it will take more work at the start, the payoff for India can be tremendous. As more and more countries struggle with the environmental and social effects of unrestricted industrial development practices in mining and refining, an alternative of environmentally and socially conscious business should become a more attractive option. India has the opportunity to partake in this particularly forward-thinking stream of economic development.
