As the world tries to wean itself off dependence on China for crucial battery materials, India is taking bold steps to position itself as an alternative in the electric vehicle supply chain.

The government has unveiled incentives of at least $3.4 billion to expedite its lagging adoption of EVs as Prime Minister Narendra Modi vows to reach net zero by 2070. The idea is that manufacturing the costliest component - batteries - locally will make the end product more affordable for the mass market and set the country up as a potential exporter, tapping into surging global demand.

The initiatives have piqued the interest of billionaires like Mukesh Ambani, whose Reliance Industries Ltd. is building an EV battery facility as part of a broader $76 billion push into clean energy.

Ambani’s is among three companies, including scooter-maker Ola Electric Mobility Pvt. and bullion refiner Rajesh Exports Ltd. set to receive incentives under a $2.3 billion program to support advanced battery cell development. Foreign automakers are also vying for a slice of the nascent shift to electric vehicles in the world’s fourth-biggest auto market. On Wednesday, Suzuki Motor Corp.

President Toshihiro Suzuki said that the company plans to invest 100 billion rupees in EV and battery manufacturing in India. With gigawatt-scale manufacturing facilities planned, India could carve out a role as an exporter of lithium-ion cells to European and American markets, said Rahul Prithiani, senior director for energy, sustainability and commodities at Crisil Ltd., the local analytics unit of S&P Global.

“But for this, India needs to secure robust supply chains along with recycling capabilities,” he said.And therein lies the biggest challenge to India’s EV ambitions.

The world’s second most populous country has only a fraction of the raw materials needed to satisfy domestic demand for lithium-ion batteries - forecast by Crisil to grow 100 fold by 2030 - let alone produce on a global scale. As the world moves away from gasoline-fueled combustion engines, demand for lithium, nickel, cobalt and other metals that go into lithium-ion batteries is soaring.

BloombergNEF estimates that global appetite for the metals used in next-generation batteries increased 50% last year alone and will nearly quadruple by the end of the decade. Supplies are getting tight, and that’s already driving up costs.

“The entry barriers are quite high,” said Jasmeet Singh Kalsi, director of Manikaran Power Ltd., which is setting up India’s first lithium refinery and scouting for nickel, cobalt and copper assets overseas. “China has captured most of it.”Manikaran could buy spodumene, a source of lithium, for $500 a ton in 2019. “Today,” said Kalsi, “the prices are around $5,000 a ton.”

  - Bloomberg