Govt slaps penalty on Reliance for missing deadline to set up battery cell plant

New Delhi: The government has slapped a penalty on a unit of Reliance Industries Ltd for failing to meet the deadline for setting up a battery cell plant for which it was granted production-linked incentives, the firm said on Tuesday.

In a stock exchange filing, Reliance said its step-down subsidiary, Reliance New Energy Battery Storage Ltd on March 3 received "a letter from the Ministry of Heavy Industries levying liquidated damages at the rate of 0.1 per cent of the performance security (Rs 50 crore) for each day of delay from January 1, 2025." The penalty was for the "delay in achievement of Milestone 1 under the programme agreement executed with MHI in connection with 5 GWh manufacturing capacity awarded under the Performance-Linked Incentive Scheme for Advanced Chemistry Cell," it said.

The liquidated damages or penalty computed till March 3, 2025 was Rs 3.1 crore.

"RNEBSL has requested for an extension of time for achievement of the said Milestone 1," it said.

The firm, however, neither disclosed the reasons for the delay nor the new timelines for meeting the target.

RNEBSL had in 2022 signed an agreement to build 10 gigawatt-hour (GWh) battery capacity with production-linked incentives for an estimated USD 400 million.

The contract was part of government initiatives to get domestic manufacturing for a new energy supply chain developed in India. Besides RNEBSL, Rajesh Exports and the unit of Ola Electric Mobility Ltd too had won bids to build the battery cell plants.

Manufacturers were eligible for Rs 181 crore worth of production-linked incentives on meeting milestones for the project that sought to create a cumulative 30 GWh capacity of advanced chemistry cell battery storage.

The firms winning the PLI were required to achieve a minimum 'committed capacity', along with local value addition of 25 per cent within two years of the agreement, and 50 per cent within five years.

Reliance had previously indicated the second half of 2026 as the timeline to launch operations at its battery Gigafactory in Jamnagar, Gujarat.

Initially, the plant is to concentrate on assembling Battery Energy Storage Systems (BESS) catering to utility-scale, residential, commercial, and mobility markets. As the facility evolves, it will expand into cell manufacturing and the production of battery chemicals, marking Reliance as a key player in advanced energy solutions.

It will have an eventual 30GWh annual production capacity for batteries based on advanced chemistry cell design.

Reliance is an investor and owner of companies involved in battery development including US lithium iron phosphate (LFP) battery manufacturer LithiumWerks and UK sodium-ion startup Faradion.

It was also an investor in US liquid metal battery maker Ambri and looks poised to take an ownership stake along with fellow investors following the MIT spinoff's recent bankruptcy proceedings.