Indian Oil Corporation and Japan's Panasonic Energy Co. Ltd. have signed a binding term sheet to draw a framework for the formation of a joint venture for manufacturing cylindrical lithium-ion cells in India.

The state-run oil marketing company is anticipating a rise in demand for batteries for two- and three-wheeler vehicles and energy storage systems in the Indian market.

This signing of the binding term sheet follows the signing of an agreement in January 2024 by the two companies. The two companies are engaged in a feasibility study regarding the utilisation of battery technology to facilitate the transition to clean energy in India, with the aim of finalising details of their collaboration by the summer of this year.

In addition to meeting domestic requirements, investments in setting up local manufacturing will set up a complete supply chain ecosystem improving India's self-reliance, fortifying India's position in the global energy landscape, the oil marketing company says.

This will also lead to creating demand for raw material sourcing within the country, enhancing domestic value addition, encourage the entry of new market participants and the growth of India's battery industry in terms of highly efficient cell technology.

Indian Oil says it aims to address environmental challenges, such as reducing CO2 emissions, through its partnership with Panasonic Energy. Leveraging Panasonic Energy’s expertise in battery development and manufacturing, both companies will strive to contribute to the growth of the lithium-ion battery industry and India's energy transition, it says.

Indian Oil is aiming to achieve its net-zero operational emissions target by 2046, aligning with India's goal to achieve carbon neutrality for the country by 2070. "In recent years, IndianOil has actively engaged in the development of clean energy sources, including the utilisation of solar power, biofuels and hydrogen," the state-owned oil marketing firm says.

Shares of Indian Oil rose as much as 2% in opening trade to hit a high of ₹170.50 on the National Stock Exchange (NSE).

Khanij Bidesh India Ltd (KABIL), a joint venture of public sector enterprises NALCO, Hindustan Copper and Mineral Exploration Company, last year signed an agreement with Argentina’s state-owned CAMYEN for lithium exploration and mining. The project cost is about ₹200 crore. This is the first-ever lithium exploration and mining project by a Government of India-owned enterprise. KABIL is looking to explore and develop five lithium brine blocks: Cortadera-I, Cortadera-VII, Cortadera-VIII, Cateo-2022-01810132 and Cortadera-VI spread across an area of about 15,703 hectares in the Catamarca province of Argentina.

Meanwhile, Tata Motors is working closely with the Tata Group’s lithium-ion cell manufacturing subsidiary Agratas Energy to further drive domestic value addition in the electric vehicle business, Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, told Fortune India last year.

The Parliament amended mining rules in 2023, paving the way for private companies to mine lithium, cobalt and nickel – the three critical raw materials required to manufacture battery cells.

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