• The Ministry of Heavy Industries has signed an agreement with Reliance New Energy Battery Limited (a subsidiary of Reliance Industries Limited) under the Production Linked Incentive (PLI) Scheme for Advanced Chemistry Cell. 

• This agreement awards Reliance New Energy Battery Limited a 10 GWh ACC capacity and makes it eligible to receive incentives under PLI ACC scheme.

• This signing is another milestone in the implementation of PLI Scheme on ‘National Programme on Advanced Chemistry Cell (ACC) Battery Storage’.

What is PLI ACC?

• Advance Chemistry Cells (ACCs) are the new generation advance energy storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required.

• The consumer electronics, electric vehicles, advanced electricity grids, solar rooftop, etc which are major battery consuming sectors are expected to achieve robust growth in the coming years. It is expected that the dominant battery technologies will control some of the world’s largest growth sectors.

• Globally, manufacturers are investing in these new generation technologies at commercial scale to fill the expected boom in battery demand through 2030. 

• Integrated battery value can be broadly divided (at the sales end) into the battery pack and the ACCs. While several companies in India have already started investing in battery packs assembly, the capacities of these facilities are too small when compared to global averages. 

• Investments in manufacturing and overall value addition for ACCs are still negligible in India. Hence almost the entire domestic demand of ACCs is still being met through imports.

• ‘National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ was approved by the Union Cabinet on May 12, 2021 with an outlay of Rs 18,100 crore for seven years. 

• This scheme will strengthen the ecosystem for electric mobility and battery storage in the country. 

• The scheme envisages to enhance India’s manufacturing capabilities of Advanced Chemistry Cell (ACC) by setting up of manufacturing facilities with emphasis on maximum domestic value addition.

• It aims to achieve a cumulative manufacturing capacity of 50 GWh for ACCs and an additional cumulative capacity of 5 GWh for niche ACC technologies. 

• The PLI ACC scheme is designed to boost local value addition while ensuring that the cost of battery manufacturing in India remains globally competitive.

• With the latest agreement with Reliance New Energy Battery Limited, a cumulative capacity of 40 GWh has been awarded to four selected beneficiary firms out of 50 GWh capacity. 

• In the first round of bidding conducted in March 2022, three beneficiary firms were allocated a total capacity of 30 GWh, and programme agreements for that round were signed in July 2022.

Expected outcomes of the scheme:

• Direct investment of around Rs 45,000 crore in ACC battery storage manufacturing projects.

• Facilitate demand creation for battery storage in India.

• Facilitate ‘Make in India’. Greater emphasis upon domestic value-capture and therefore reduction in import dependence.

• India’s EV market is projected to grow at 49 per cent CAGR between 2022-2030, requiring strong domestic battery production. The scheme supports grid-scale energy storage solutions essential for solar and wind power integration.

• Currently, India imports over 80 per cent of its lithium-ion batteries, mainly from China and South Korea. A robust domestic battery ecosystem will improve supply chain resilience.

• The manufacturing of ACCs will facilitate demand for EVs, which are proven to be significantly less polluting. As India pursues an ambitious renewable energy agenda, the ACC programme will be a key contributing factor to reduce India’s Greenhouse Gas (GHG) emissions which will be in line with India’s commitment to combat climate change.

• Net savings of Rs 2-2.5 lakh crore on account of oil import bill reduction during the period of this programme due to EV adoption as ACCs manufactured under the programme is expected to accelerate EV adoption.

• Impetus to Research & Development to achieve higher specific energy density and cycles in ACC.

• Promote newer and niche cell technologies.

Other initiatives to boost domestic battery manufacturing

• In tandem with the PLI ACC scheme, the Union Budget for FY 2025-26 introduced several transformative measures aimed at accelerating domestic battery manufacturing and supporting the growth of the e-mobility ecosystem in the country. 

• The Union Budget exempted 35 additional capital goods for EV battery manufacturing from Basic Customs Duty (BCD), a targeted initiative designed to boost the production of lithium-ion batteries within India. 

• The Ministry of Heavy Industries remains committed to creating an enabling environment for innovation, fostering a robust domestic supply chain, and attracting significant Foreign Direct Investment — all crucial elements in advancing India’s strategic vision for sustainable development and self-reliance. 

• This initiative has acted as a catalyst for Indian cell manufacturers to set up cell manufacturing facilities. Apart from the PLI beneficiary, more than 10 companies have already started setting up 100+ GWh additional capacity.

Key Challenges 

• India lacks domestic lithium reserves, requiring foreign partnerships for raw materials.

• Battery factories require significant capital investment and logistics infrastructure.

• China dominates the global lithium-ion battery supply chain, posing pricing and technology challenges.

• Battery disposal and recycling regulations need to be strengthened.

Way Forward

• Strengthen bilateral agreements with lithium-rich nations (Australia, Argentina and Chile).

• Expand beyond PLI incentives and encourage private-sector-led battery manufacturing parks.

• Implement robust battery recycling policies to reduce waste and improve resource efficiency.

• Promote solid-state batteries, sodium-ion technology, and green hydrogen storage solutions.

(The author is a trainer for Civil Services aspirants.)