Tata Motors currently holds almost 49 percent of India's passenger EV market, and by 2026 its group company Agratas is expected to begin supplying it with lithium-ion cells from a 20 GWh plant in Sanand, Gujarat. Agratas was set up with Tata Motors and Jaguar Land Rover as its core client base, which simply means the group guaranteed itself a buyer before even building the factory. Ola Electric has done something similar with its in-house 4680 cell, branded as the "Bharat Cell", and Reliance is building its own 30 GWh capacity through Reliance New Energy Solar. All these events are not very unusual in the world of industrial business. It is, in fact, exactly what the Indian government promoted when it rolled out the Production Linked Incentive scheme for Advanced Chemistry Cells (ACC) battery storage, all to build 50 gigawatt-hours (GWh) of domestic manufacturing capacity. However, it does raise a very serious competition question for the antitrust regulators, especially for a sector so young and fast-moving: what happens when the same handful of firms end up controlling both the vehicles as well as the batteries that power them.

India’s EV battery ecosystem is still in its nascent phase, while the government is actively shaping who builds all of it. The ACC PLI scheme, worth roughly ₹18,100 crore, selected a small set of winners, including Reliance New Energy Solar, Ola Electric Mobility, Hyundai Global Motors, and Rajesh Exports. And while Tata’s Agratas sits outside that scheme, it is building comparable scale all on its own as well. In practical terms, what all of this simply means is that within a few years, most of India’s domestic cell capacity will be dominated by the same companies that also sell the vehicles those cells go into. Ola already makes both the scooter and the cell, while Tata will soon make both the car, and through Agratas, a meaningful share of the cell. All of this is vertical integration in its purest form, a single entity controlling consecutive links in the same supply chain, and it is happening at the very moment when India’s EV volumes are about to take off, projected to jump from 15 GWh of battery demand in FY24 to over 120 GWh by FY30.

The Competition Commission of India has generally taken a relatively lenient view of vertical integration. Under Section 3(4) of the Competition Act, vertical agreements such as exclusive supply or exclusive distribution arrangements are not treated as automatically anticompetitive. The basic test is whether a deal causes an Appreciable Adverse Effect on Competition (AAEC). If you look at how CCI decides these matters, especially recent combination approvals citing supply-chain efficiency gains, you’ll find that it generally treats vertical integration as pro-competitive. On the surface, it is a reasonable starting point. If an EV maker decides to produce its own battery packs, it saves on costs, keeps quality in check, and protects itself against raw material price swings. It would not make sense for the CCI to just step in and block it out of habit.

The issue is that “usually pro-competitive” assumes a typical market, and India’s EV market is far from typical right now. There are barely any serious domestic cell manufacturers, and most of them are also vehicle OEMs. If someone like Agratas starts selling its cells to independent EV makers on significantly higher prices than what it charges Tata Motors internally, that starts to look like a textbook case of input foreclosure. The same logic runs the other way too, like if Tata Motors or Ola were to buy cells only from their own affiliates once production scales up, an independent cell manufacturer could find itself starved before it even gets going (customer foreclosure). And this isn’t some far-away dream, CCLE’s own coverage of the WhatsApp API case dealt with a structurally similar question: whether a dominant player's control over something essential to downstream competitors could be abused even without an outright refusal to deal. While batteries might be less glamorous than an API, but the underlying antitrust issues are still the same.

Here is the real headache for a competition lawyer, even more than the foreclosure risk. India’s merger control regime, under section 5 and 6 of the Competition Act, is strictly built around notifiable “combinations”–acquisitions, mergers, or amalgamations that cross specified asset/turnover thresholds. The Combination Regulations have a specific trigger for vertical overlaps requiring a more detailed Form II filing, but only when the parties cross the 25% threshold in vertically related markets. That framework works well when Tata or Reliance buys out an existing player. Yet it becomes completely useless when they just build the capacity internally, the way Agratas, Ola and Reliance are doing. There is no transaction, no target, literally nothing to notify, because nobody is buying anybody. The dominance is being grown in-house, completely outside the CCI’s gaze. By the time any conduct becomes visible enough to trigger a section 4 abuse-of-dominance inquiry, the market structure will likely already be locked in.

There’s a second gap that exists as well. The government’s PLI scheme, for ACC manufacturing capacity, handed out massive, subsidised capacity to a handful of chosen winners. That seems like understandable industrial policy to kickstart domestic manufacturing, but it also locks out the organic entry dynamics that would otherwise correct excessive market concentration. Regulators abroad usually coordinate closely when state subsidies distort the market structure, but unfortunately, India doesn’t have that kind of an institutional bridge between CCI and the Ministry of Heavy Industries yet that can talk things out, something that has been pointed out by CCLE as well regarding the CCI-MeitY overlap in digital markets.

To be clear, none of this calls for blocking vertical integration within the EV battery ecosystem altogether. That would be completely counterproductive, especially when India desperately needs to build a domestic supply chain from scratch. But a few targeted steps would close the gap between how fast this market is consolidating and how slowly the regulatory institutions notice.

First, the CCI doesn’t need to wait for a full-blown Section 4 complaint to set boundaries. It can issue sector-specific guidelines, similar to what other jurisdictions have done for critical inputs, clarifying the circumstances on what constitutes discriminatory pricing or constructive refusal to deal for integrated OEM-battery groups. Second, market studies, a tool CCI already has and has been used effectively with e-commerce and telecom before, could be directed at the EV battery market. It would give CCI clean data on actual capacity, tracking market shares and access terms before the market locks everyone out. Third, we need formal inter-agency coordination with the Ministry of Heavy Industries. The Commission shouldn’t be learning about how PLI allocations affect existing market concentration only after a rival or a statutory authority file an information under Section 19.

The Tata-Agratas relationship, and its Ola and Reliance equivalents, are not anti-competitive per se. They are standard industrial strategy in a capital-intensive sector where India desperately needs more of this kind of domestic capacity, not less. But competition law is supposed to look ahead and anticipate the structural issues in the market’s structure, not just sweep the wreckage. And sadly enough, our current merger control framework has never been designed for these corporate buyouts, and it is completely blind to the dominance being built in-house with state subsidies behind it.

Utkarsh Raj is a student at Faculty of Law, Delhi University and a Research Intern at the Centre.