But traders and analysts say the domestic market would find it difficult to pass on any further increases, forcing importers to reduce purchases and Indian battery buyers increasingly relying on batteries from backyard workshops.

"So far, we have been able to pass on the lead price increase to customers," K. Suresh, chief financial officer of Amara Raja, India's second-largest battery maker, told Reuters.

"How far the users would be sympathetic to the increase is anyone's guess," he added.

India consumes about 350,000 tonnes of lead annually.

Imported primary lead accounts for 40-50 percent of demand, domestic lead firms contribute 15-20 percent and the rest comes from recycled sources.

Lead for delivery in three-months on the London Metal Exchange has risen around 120 percent so far this year to an all-time high of US$3,645, as production problems across the world and limited stocks have raised supply concerns.

Stocks of lead in LME warehouses stood at 22,350 tonnes -- -- around one day's global consumption and down from 54,950 in October last year.

"When the price of lead goes so high, it is bound to affect the demand to an extent," said L. Pugazhenthy, executive director of the Indian Lead Zinc Development Association.

The average price of a good quality car battery in the domestic Indian market could range from 2,000 rupees (US$50.50) to 8,000 rupees, depending on the automobile model. Prices have risen by 20 to 30 percent over the last one year.

BUYERS DEFERRING PURCHASES

Automobile batteries contribute to about two-thirds of the lead consumed in Indian domestic markets. At least 10 kg of lead is used in each automobile battery.

Battery sales to original equipment makers, such as car manufacturers, have slowed, Suresh said. High prices could also prompt users such as truck and cab drivers to look for batteries made by small firms that scavenge old batteries for raw material.

"Those buying batteries may think of buying later," said a senior industry official, who declined to be identified. "It will give a boost to recycled batteries, simply because they are cheaper."

But the biggest challenge facing the market in the recycled market is the quality of batteries produced.

"There are a few players who produce good quality recycled batteries but the majority run shoddy operations which are not environmentally friendly," the industry official added.

He said these firms were reluctant to switch to new production technology because of the costs involved.

"India's central pollution control board has been trying to streamline the operations of the recycling industry. But it is a tough job and enforcement is weak," he added.

Nearly 30 percent of lead demand for car batteries is met from recycled material. Many of these firms operate backyard units and churn out low quality products.

Industry officials said if prices remain high during the winter months, the domestic market would see a boom in demand for recycling material.