Govt may relax rules under PLI scheme for ACC battery output after delays

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The government's plan to push the manufacturing of advanced chemistry cells (ACCs), which are the batteries used in electric vehicles and other industrial uses, under its production-linked incentive (PLI) scheme is likely to change, according to a report by Mint.

 

The changes are being planned as the scheme did not work as expected. Heavy Industries Minister HD Kumaraswamy told Mint that the goal was to build 50 gigawatt-hours (GWh) of battery capacity by December 2024, but by June this year, only 1.4 GWh was ready.

 

Kumaraswamy had earlier said that India’s ACC capacity is growing despite delays. He noted that Ola Cell Technologies has already installed 1.4 GWh capacity, and more than 10 other companies are setting up over 100 GWh of total capacity.

₹18,100-crore PLI-ACC scheme

In 2021, the government announced the ₹18,100-crore PLI-ACC scheme aimed at enhancing India’s manufacturing capabilities of ACC by setting up Giga-scale ACC and battery manufacturing facilities in the country with emphasis on maximum domestic value addition.

 

In 2022, 30 GWh were allotted under the scheme, of which 20 GWh went to Ola Electric, and 5 GWh each to Reliance New Energy and Rajesh Exports. Reliance got another 10 GWh in September 2024.

 

Under the scheme, companies had to ensure that 25 per cent of the battery parts are made locally within two years, and this must rise to 60 per cent within five years. They also must invest ₹225 crore per GWh for their promised capacity.

What are companies saying?

According to the report, the government recently issued show-cause notices to companies approved under the scheme. Most of the companies have asked for an extra 18 months to meet targets.

What is govt planning to do?

The Ministry of Heavy Industries is considering giving companies more time and relaxing rules on how much of the battery must be manufactured in India. A final decision has not yet been made.

 

According to Mint, the government may allow companies to import cells at lower duties until they are ready to make the cells in India.

What experts say

Industry experts said the problems are not just delays at factories, but there are several other issues.

 

India Energy Storage Alliance's Debmalya Sen told Mint that China’s strict control over graphite exports has slowed India’s battery production. He added that cell manufacturing itself may take two more years to properly begin. He said high customs duties help Indian manufacturing, but very high duties across the supply chain increase costs and reduce India’s competitiveness. So, incentives are still needed.

 

The Net Zero Energy Transition Association (NETRA) wants the government to set up a single-window system to help companies deal with issues like equipment buying, foreign suppliers, and getting key materials.