Govt mulling relaxations as made-in-India battery push runs into delays

According to two people aware of the matter, the Union heavy industries ministry is weighing extensions and easier localization norms for the beneficiaries of the ₹18,100-crore PLI-ACC scheme that was announced in 2021.

This comes in the backdrop of the scheme’s limited success. The plan was to have 50 gigawatt-hour (GWh) of output capacity ready by December 2024, but as of this June, just about 1.4GWh of Ola was ready, according to data provided by Union heavy industries minister H.D. Kumaraswamy to Mint in an email interview in June.

The first person cited above said that the Centre has recently sent show-cause notices to companies that were approved under the scheme.

“The request from the companies remains for extension of the deadline by about another 18 months, and the requests are being considered,” this person said, adding that a final decision is yet to be taken.

The second person said the government is also looking at allowing imports of cells at lower duties till companies are ready to develop the cells themselves.

Kumaraswamy had told Mint in June that India’s ACC capacity was rising, despite challenges faced by battery makers in meeting timelines under the scheme.

“However, with support and hand holding, M/s Ola Cell Technologies Private Limited (OCTPL) has reported successful installation of 1.4GWh capacity,” Kumaraswamy had said. “Apart from the PLI beneficiary firms, more than 10 companies have already started setting up cell manufacturing units for more than 100 GWh capacity.”

In 2022, 30GWh of capacity was allotted under the scheme, wherein 20GWh was allotted to Ola Electric, 5GWh each to Reliance New Energy—a subsidiary of Reliance Industries—and to Rajesh Exports. Reliance was allotted a further 10GWh in September 2024.

Under the scheme, a beneficiary firm has to ensure that local components make up at least 25% of the manufacture, while also making the mandatory investment of ₹225 crore per GWh for committed capacity within two years. The share of local parts needs to be increased to 60% within five years.

Queries emailed to the heavy industries ministry, Reliance Industries, Ola Electric and Rajesh Exports remained unanswered till press time.

With this, the PLI-ACC scheme joins other PLI schemes that have failed to gain momentum as initially anticipated. For instance, the Centre has already extended the timeline for commissioning of projects under the ₹19,500-crore PLI scheme for solar modules by a year, according to a government order.

What experts say

Industry analysts say the challenges run deeper than just project-level delays, and several other factors have contributed as well.

“China’s strict control of graphite exports have impacted the progress of battery manufacturing capacities in the country,” said Debmalya Sen, president of the India Energy Storage Alliance (IESA), adding that even manufacturing of cells—the fundamental units needed to make batteries—may take a couple more years to take off.

“Restrictions like high BCD (basic customs duty) are important for boosting domestic manufacturing, but high duties across the supply chain increase cost and lower competitiveness of Indian products. Therefore, the need for incentivizing this sector remains,” Sen said.

Highlighting India’s dependence on imported batteries, Debi Prasad Dash, co-founder and executive director of Net Zero Energy Transition Association (NETRA), said that with rising demand in both electric vehicles (EV) and stationary battery storage, India imported over 12GWh of lithium-ion batteries in the past 12 months, with expectations to increase this by three to five times in the coming year.

Given this surge in demand and the current geopolitical climate, indigenization of ACC batteries has become essential, Dash said, adding that PLI-ACC beneficiaries are already delayed by a year from their original timelines, and such delays could hamper overall industry growth.

“NETRA urges the ministry to establish a dedicated single-window facility for PLI-ACC manufacturers to resolve issues such as equipment procurement, foreign resource mobilization, and availability of upstream materials,” he said.

The reason for delay in the PLI-ACC scheme outcomes lies in upstream alignment, said Vikram Handa, managing director of Epsilon Advanced Materials, which makes anode and cathode materials used in lithium-ion batteries.

“Without secure access to core materials, cell manufacturing simply cannot take off,” he said. “If India wants to see gigafactories running at scale, we must connect the dots between upstream readiness and downstream investment.”

Upstream readiness refers to development of products such as anode and cathode, and downstream investment means investment in manufacturing of cells and battery packs.