The Indian government is considering relaxing the requirements for its ambitious "made-in-India" battery production push, as the initiative faces delays. The Union heavy industries ministry is contemplating extensions and easier localization norms for beneficiaries of the ₹18,100-crore Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) battery storage, which was announced in 2021.
The PLI scheme was designed to establish a robust manufacturing base for advanced batteries in India, reducing reliance on imports and fostering self-reliance. The scheme aimed to create 50 GWh of annual production capacity for advanced battery cells, along with an additional 5 GWh for niche advanced chemistry cells by 2027. Financial incentives tied to production milestones were intended to help manufacturers achieve economies of scale and boost overall industry growth.
However, the rollout of the scheme has encountered challenges. Domestic manufacturing of battery components like anodes, cathodes, and electrolyte salts is still heavily dependent on imports, with approximately 90% of critical minerals required for cell production sourced from abroad. This import dependence increases project costs and raises supply chain risks.
To address these issues and bolster the electric vehicle (EV) industry, the government is considering incentives for battery component manufacturing. The Ministry of Heavy Industries is identifying components that require financial support, aiming to reduce import dependence and strengthen the local ecosystem for electric mobility and battery storage. These incentives could take the form of financial systems, policy regulations, and measures to improve the ease of doing business.
The government is also exploring ways to integrate the battery value chain with India's broader industrial ecosystem and raw material sourcing strategy. This includes securing long-term supplies of critical minerals through global partnerships, mineral exploration, and recycling initiatives. Vijay Mittal, joint secretary of the Ministry of Heavy Industries, emphasized the importance of achieving a domestic value addition (DVA) of over 50% to align with the "Make in India" initiative. He also noted that recycling could play a significant role in reducing reliance on imports for critical battery raw materials like lithium.
Furthermore, the government is actively promoting innovation through research and development to create cost-effective and sustainable battery solutions. This is complemented by initiatives like the FAME India Scheme, which aims to accelerate the adoption of EVs by offering incentives that create demand for high-quality batteries. Measures such as reduced GST rates on EVs and batteries, temporary import duty exemptions on critical raw materials, and the establishment of specialized battery parks are also underway to encourage the localization of battery production.
These efforts align with India's goal of achieving 500 GW of non-fossil fuel capacity by 2030, for which energy storage systems and domestic battery manufacturing are crucial. By relaxing norms and introducing targeted incentives, the government aims to create a more conducive environment for battery manufacturers, attract investments, and ultimately establish a self-reliant battery manufacturing ecosystem in India.
