Battery manufacturers have warned that a government recycling mandate could have a significant impact on the dry cell battery industry. Companies argue that the new rules have rendered their business model financially unviable, raising concerns about production cuts, slower investment and potential factory closures.

Panasonic Energy, which has been manufacturing dry cell batteries in India since 1972, has raised concerns regarding the rules. In its submission to the government, the company stated that current recycling technologies for zinc-carbon batteries are still evolving and do not produce metal purity levels sufficient for reuse in new battery production. The rules mandate reuse targets and pricing benchmarks without taking into account these technical limitations within the battery manufacturing value chain.

The financial implications are also notable for the company. If the entire 50% collection mandate is assigned to Panasonic, its extended producer responsibility (EPR) certificate purchase costs would increase to Rs. 500 million (US$ 5.3 million). For context, the company's total projected profit for FY26 is Rs. 60 million. Referring to this difference, Akio Fujita, Chairman of Panasonic Energy India, told a local daily: "No business can survive compliance costs that are nearly eight times its entire profitability."

He further stated: "If these provisions are not revised, a manufacturing unit that has operated in India since 1972 will be forced to shut down entirely because of these unviable complexities."

Other battery manufacturers and suppliers have also highlighted challenges associated with the pace of implementation. "Globally, such waste policies are implemented over 6-7 years in a phased manner," said Pavan Kumar, Chief Executive Officer of Indo National. "In India, a 50% collection target has been mandated from the first year, which is impossible given the absence of a collection ecosystem."

At the centre of the industry's concerns are the Battery Waste Management Rules, 2022, which came into force in 2025. Companies argue that the framework, developed largely around lithium-ion battery economics and recycling structures, does not adequately account for the characteristics of zinc-carbon dry cell batteries, which represent approximately 85% of the country's battery consumption by volume.

The issue is relevant to India's battery manufacturing sector, including suppliers of automotive accessories and related applications. Unlike lithium-ion batteries, dry cells have a low residual value and are difficult to collect after use. Even companies that have launched pilot collection programmes report low recovery rates, with the industry currently collecting only around 20% of the total volume placed on the market.

To enforce accountability, the rules introduce an EPR credit system. Manufacturers are legally prohibited from recycling batteries themselves and must instead purchase digital EPR certificates from authorised recyclers. These credits are traded through a centralised portal, with prices typically ranging from Rs. 166 to Rs. 555 per kilogram.

Industry participants argue that this mechanism creates a financial burden. While virgin zinc costs around Rs. 300 per kg, the proposed regulatory penalty ranges from Rs. 720 to Rs. 2,400 per kg. According to industry estimates, the cost structure reflects lithium-ion battery economics rather than the realities of the zinc-carbon battery segment, resulting in compliance costs that are nearly four times higher than the wider industry's profit levels.

Battery manufacturers contend that, unless the regulatory framework is adjusted to reflect the technological and economic characteristics of dry cell batteries, the sector could face operational disruptions, reduced manufacturing activity and lower investment across India's battery production ecosystem.