IFC supported Gujarat’s first integrated battery materials plant with a major climate investment.
The International Finance Corporation has placed a significant bet on India’s electric vehicle future, investing nearly $50 million to help establish the country’s first fully integrated battery materials manufacturing facility. This investment in GFCL EV Products Limited marks a turning point for India’s ambitions to control its own EV supply chain, reducing its reliance on imports from China and other countries.
The World Bank Group’s private-sector arm announced the deal on December 5, which aims to establish a new plant in Jolwa, near Bharuch in Gujarat. This facility will manufacture the essential components for lithium-ion batteries under one roof, including electrolyte salts, cathode materials, and the specialized binders used in every electric vehicle battery.
This is IFC’s first investment in a battery materials company in India, signaling the country’s growing capacity to compete in high-value chemistry, which is crucial for electric vehicles. For a country racing to electrify its transport sector, this deal couldn’t have come at a better time.
What Makes This Facility Unique
Unlike typical manufacturing plants that focus on a single component, GFCL EV’s facility will handle multiple stages of battery production under one roof. The plant will manufacture lithium hexafluorophosphate electrolyte salt, custom electrolyte formulations, lithium iron phosphate cathode material, and PVDF/PTFE binders. These materials together constitute more than half the cost of a lithium iron phosphate battery cell.
The parent company, Gujarat Fluorochemicals Limited, already operates as one of the largest producers of fluoropolymers and specialty chemicals in India. With three manufacturing units in Gujarat and a captive fluorspar mine in Morocco, GFL brings decades of chemistry expertise to the battery materials business. The company invested approximately ₹1,125 crore (approximately $135 million) in capital expenditure during FY 2024-25, with more than half allocated to EV-related projects.
Racing to Meet Growing Demand
India’s electric vehicle market is growing rapidly. Industry estimates project that demand for lithium batteries will increase from approximately 4 gigawatt-hours in 2023 to approximately 139 gigawatt-hours by 2035, driven primarily by compact passenger cars and small SUVs. The government’s Production Linked Incentive scheme for battery storage aims to create large-scale manufacturing capacity with a total budget of ₹18,100 crore (approximately $2.2 billion). The challenge is not just about manufacturing enough batteries, but ensuring that India doesn’t simply assemble components made elsewhere. The greatest import dependence is on cathode materials and electrolyte salts, where China currently dominates global production. According to industry estimates, based on chemistry and metal prices, cathode materials alone can account for 29% to 51% of the total cost of a lithium-ion battery.
Why is the IFC making such a big bet?
This investment fits into the IFC’s broader strategy of supporting projects that benefit the climate, create high-skilled jobs, and strengthen supply chains. By supporting domestic battery material production, the IFC aims to reduce India’s reliance on imported components, while also helping the country transition towards electric vehicles and renewable energy storage. The IFC has already invested heavily in India’s EV ecosystem, including a $20 million equity stake in Transvolt Mobility, its first global investment in an EV fleet platform. The organization has also supported two- and three-wheeler manufacturers, last-mile logistics operators, and charging infrastructure providers. Stepping into the battery materials sector is the next logical step towards building a complete domestic EV supply chain.
Facing challenging circumstances
This investment comes at a challenging time for global battery markets. Lithium hydroxide prices have fallen by nearly 90% from their 2022 peak, while battery pack prices have fallen by approximately 20% in 2024 to a record low of $115 per kilowatt-hour. Overcapacity in global cathode and materials markets could squeeze profit margins and increase competition from established players in China and South Korea.
Technological shifts also present challenges. While GFCL EV focuses on lithium iron phosphate chemistry, which has become mainstream for mass-market EVs due to its safety and cost advantages, automobile manufacturers are exploring alternative chemistries, including manganese-rich variants and even sodium-ion batteries. GFL’s expertise in fluorine-based materials across a variety of battery types should provide some protection against single-chemistry risk.
A Blueprint for Indian Manufacturing
If successful, the GFCL EV facility could serve as a model for how traditional chemical companies can pivot to high-value energy transition materials. This project combines decades of process knowledge with the emerging demand from the electric vehicle revolution. For India, owning the chemistry inside the battery cell is as crucial as assembling the cell itself.
This partnership between a global development financier and an established Indian chemical manufacturer demonstrates that India’s battery story is moving beyond assembly plants to the more strategic business of controlling critical materials. Whether this gamble will pay off depends on execution, market conditions, and the country’s ability to compete with Asian manufacturers who have spent years perfecting these processes.