When it comes to energy, India is at a pivotal stage. The country is compelled to scale renewable capacity while reckoning with the absolute need to become self-sufficient in the energy sector.
The nation has been making leaps in the sector, even positioning itself as one of the world’s fastest-growing clean energy markets. However, with the beginning of renewable energy deployment, we are already facing the next set of hurdles, the foremost being material security, recycling, and the long-term sustainability of domestic supply chains.
The upcoming Union Budget 2026 is anticipated to play a crucial role in strengthening the foundation of our renewable future.
Energy transition and the need for storage
India reached a key milestone in the country’s energy transition journey. In 2025, the country achieved 250 GW of installed capacity of non-fossil fuel energy generation, which was mainly driven by solar and wind additions.
This is approximately 51 per cent of the country’s electricity capacity. This growth supports national climate commitments and reduces fossil fuel dependence. At the same time, in order to ensure sustained and increased adoption of renewable energy, there is a need to manage energy storage systems and grid stability is essential. This is where lithium-ion batteries play a key role, becoming central to energy transition needs.
Not only electric mobility, but grid storage as well. Battery deployment has been expanding, and issues regarding its long-term supply, lifecycle management and sourcing have become increasingly relevant, even integral to the economics and environmental footprint of clean energy systems.
Critical minerals and supply chain vulnerability
Lithium-ion batteries have high energy density, proven performance and have been developed over time to even mitigate thermal instability, which was once considered a huge drawback.
The world has embraced lithium-ion battery technology, despite its drawbacks, as no other technology yet provides the balanced outcome in the areas of cost, effectiveness, lifetime, and performance at scale. These batteries contain critical minerals such as lithium, cobalt, nickel, manganese and copper.
Globally, the supply of these materials is geographically concentrated, which means that countries that import these critical minerals, like India, are exposed to geopolitical and price risks.
In 2025, India took the initial steps towards security mineral partnerships and exploration activities, but near-term demand will be fulfilled by imports for the foreseeable future.
In this context, recycling and recovery of critical minerals from used batteries become strategically important for the country. A secondary supply stream that can be maintained domestically is an answer to the tightrope India is currently on.
Recycled materials will not substitute mining in the short term, but can reduce import dependency, price volatility and improve material efficiency. This is why budgetary support to strengthen this circular supply chain can address India’s broader energy security goals.
Battery recycling
Industrial development and environmental protection are both shaping battery recycling. Improper disposal of batteries can present a host of issues, from soil contamination to water pollution and health hazards. At the same time, battery recycling needs technological capability, investment and regulatory compliance.
From a budgetary perspective, the recycling sector faces constraints common to other clean technologies, i.e., requiring high upfront costs, uncertain revenue streams tied to volatile commodity prices.
Due to the increased adoption, the management of the end-of-life volumes has become important and it is crucial that we do not lose critical materials to informal sector leakage. Commercially viable recovery of critical minerals requires advanced technology with strict safety norms, which means scaling faces a steep climb.
When it comes to batteries, India needs to concentrate on the entire supply chain, starting from cells, recycling and refined raw materials for cells. The Production Linked Incentive (PLI) scheme for Advanced Cell Chemistry (ACC) was a serious attempt to invite investment, develop technology and reduce import dependence. Progress is slow, as is the case with any complex technology, further slowed by supply chain dependency and execution timelines.
Manufacturing of cathode and anode materials, electrolytes and refined raw materials all need to be encouraged; many of these are currently imported. Neutral fiscal tools like infrastructure support, tax exemptions, and concessional finance can improve viability and scale without distorting market incentives.
Traceability is a critical aspect of recycling and sustainability. Extended producer responsibility rules should be implemented well, and batteries should be tracked from manufacture through end of life via manifests, reporting portals, and verifications to reduce leakage into informal channels. Thus, public investment in digital infrastructure and capacity building for pollution control boards may improve enforcement due to institutional strengthening.
Long-term outcomes
Expectations from the Union Budget 2026 should be seen against the fiscal constraints present. Clean energy and recycling do not require large subsidies as such but would benefit greatly from access to finance, consistent policy and stable regulations.
Time-bound targeted support can increase private investment while negating long-term dependency. Policy should support outcomes rather than technologies since technologies are new and innovative in this sector, so the pathways to energy security are diverse.
India’s clean energy transition is due to enter a complex phase where the systems’ resilience and technological prowess are due to be tested. We are going beyond installed capacity to material sustainability.
Addressing structural gaps in financing, infrastructure will support the clean energy sector to scale, become economically resilient and resource-efficient.
(Manikumar Uppala is the Co-Founder and Chief of Industrial Engineering, Metastable Materials)
The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.
