Structural problems slowing India's battery production scheme: Study

Bengaluru: The Centre's Rs 18,100 crore-product linked incentive (PLI) scheme introduced in October 2021 to boost Advanced Chemistry Cell (ACC) battery storage has shown a substantial gap between intended and actual outcomes, a new study by the Institute for Energy Economics and Financial Analysis, and JMK Research and Analytics shows.

The study noted that ACC PLI scheme, launched to reduce dependency on import and encourage electric vehicle adoption, sought to achieve manufacturing capacity of 50 GWh but at the end of October 2025 progress under the scheme was limited to 1.4 GWh of the targeted capacity and another 10 GWh under development.

"Among the first-round of beneficiaries, only Ola Electric has commissioned capacity, amounting to 1.4GWh. In addition, Ola Electric and Reliance New Energy are collectively developing approximately 8.6GWh of capacity, but this development has been delayed relative to the scheme’s prescribed timelines," the study said, adding that the remaining 20GWh of capacity, comprising 15GWh allocated to Ola Electric and 5GWh to Rajesh Exports, has seen little to no tangible progress.

The study pointed to flaws in the scheme's design, aggressive timelines, high minimum bid (5 GWh) capacity and awarding of capacity to inexperienced players as reasons for the delay. In addition, structural problems and supply-chain risks due to heavy dependence on China for manufacturing equipment, critical raw materials and minerals constrained efforts to build a self-reliant battery sector.

“Going forward, improving the effectiveness of ACC PLI will require a holistic, multi-pronged strategy. This would include introducing robust cell testing and certification infrastructure; scaling up equipment manufacturing, and recycling; and developing skilled domestic talent, among other things,” said the report’s co-author Saif Jahangir, consultant, JMK Research and Analytics.

Vibhuti Garg, IEEFA's South Asia Director, said it was equally important to assess how India can attract global battery players to establish manufacturing facilities in the country.