Indian Oil Corporation Ltd (IOCL) has announced it will form a joint venture with Japan's Panasonic Energy to manufacture cylindrical lithium-ion cells in India.

The companies have now signed a binding term sheet to draw up a framework for the joint venture, after signing a heads of agreement on 21 January. A heads of agreement is a non-binding document outlining the main issues relevant to a tentative sale, partnership, or other agreement.

The two companies are currently conducting a feasibility study on using battery technology to facilitate India’s transition to clean energy. The filing said both companies aim to finalise details of their collaboration by this summer.

The development comes as lithium-ion cell manufacturing in India is gaining momentum with robust demand from both electric vehicles and battery energy storage systems (BESS).

IOCL said in a regulatory filing on Sunday, "Aiming to empower the transition to clean energy in India, Indian Oil Corporation Limited and Panasonic Energy Co. Ltd. have signed a binding term sheet to draw a framework for formation of a JV for manufacturing cylindrical lithium-ion cells in India in anticipation of expanding demand for batteries for two-and three-wheel vehicles and energy storage systems in the Indian market."