Why in news?
Recent analyses have noted a substantial gap between the ambitious targets of India’s Advanced Chemistry Cell Production Linked Incentive scheme and the actual battery manufacturing capacity being created. The programme aims to build a domestic supply chain for lithium‑ion and other advanced chemistry cells, but only a fraction of the targeted capacity has been realised so far. The discussion has reignited debates on how to accelerate investments in battery production to support electric vehicles and renewable energy storage.
Background
The ACC‑PLI scheme was approved by the Union Cabinet in May 2021 and formally launched later that year. With an outlay of ₹18,100 crore, it seeks to establish 50 gigawatt‑hours (GWh) of advanced chemistry cell manufacturing capacity in India by 2026. The scheme is technology‑agnostic, meaning that lithium‑ion, sodium‑ion and other emerging chemistries are eligible. It is administered by the Ministry of Heavy Industries.
Key features
- Performance‑linked incentives: Companies receive subsidies based on the quantity of batteries actually sold, up to a cap of about ₹2,000 per kilowatt‑hour. This design rewards efficient production and market uptake.
- Investment requirements: Successful bidders must invest a minimum of ₹225 crore per GWh and set up their factories within two years. They are expected to achieve at least 25 percent domestic value addition within two years and raise it to 60 percent within five years.
- Capacity allocation: Of the 50 GWh target, about 30 GWh has been awarded to three consortia, including private and public sector companies. The remaining 20 GWh capacity is to be allotted through a fresh bidding round.
- Import savings: The government estimates that successful implementation could save ₹2–2.5 lakh crore in oil imports over the scheme’s lifetime and create thousands of jobs across the battery value chain.
Challenges and the way forward
- Slow uptake: High capital costs, technology uncertainties and global supply chain disruptions have delayed some projects. Only a small fraction of the targeted manufacturing capacity has reached construction or pilot stage.
- Raw material supply: India lacks domestic reserves of lithium and cobalt. Ensuring long‑term supplies through international partnerships or alternative chemistries is essential.
- Skilled workforce: Building giga‑factories requires trained engineers and technicians. Targeted skill development programmes can help bridge the gap.
- Policy clarity: Clear guidelines on duty structures, recycling regulations and environmental safeguards will improve investor confidence.
Significance
- Energy transition: Domestic battery manufacturing supports India’s goal of increasing the share of electric vehicles and renewable energy in its energy mix.
- Economic opportunity: Building a complete battery value chain – from materials to cell assembly – can create high‑quality jobs and reduce dependence on imports.
- Technological self‑reliance: Developing indigenous capabilities in advanced chemistry cells aligns with the “Aatmanirbhar Bharat” initiative and can attract foreign investment and technology partnerships.
Source: TH