Cabinet approves INR 18,100-crore incentives for advanced battery storage production


The Union Cabinet chaired by prime minister Narendra Modi has approved an extension of the national production-linked incentive (PLI) scheme to include advanced battery storage manufacturing.

The scheme, with an outlay of INR 18,100 crore (US$ 2459 million), will incentivize global and domestic companies to build a cumulative 50 GWh of advanced chemistry cell (ACC) and 5 GWh of ‘niche’ ACC production facilities in India.

The fiscal incentives are proposed under the umbrella initiative of National Programme on Advanced Chemistry Cell (ACC) Battery Storage that aims to reduce India’s ACC import dependence.

While several companies have already started investing in battery packs in India, there is a negligible investment in ACC manufacturing and value addition. As a result, India has to meet all of its ACC demand through imports.

Globally, manufacturers are investing in ACC battery storage technologies at a commercial scale as the demand for such batteries is expected to boom through 2030 due to the robust growth in electric vehicles, advanced electricity grids, rooftop solar, etc.

Beneficiary selection

Under the PLI Scheme, incentives will be given to domestic and global companies setting up mega-manufacturing plants in ACC battery storage technology areas such as lithium. The manufacturers will be selected through a transparent, competitive bidding process.

The selected bidder would have to commit to set up an ACC manufacturing facility of a minimum 5 GWh to maximum 20 GWh and ensure a minimum of 60% domestic value addition at the project level within five years.

The manufacturing facility would have to be commissioned within two years. The incentives will be disbursed after that over a five-year period. 

The cash subsidy shall be offered on the output, i.e., the volume of cells manufactured and sold by the beneficiaries. The incentive amount will increase with increased specific energy density and cycles and increased local value addition. 

The beneficiary firms have to achieve a domestic value addition of at least 25% and incur the mandatory investment of INR 225 crore (US$30.6 million)/GWh within two years (at the mother unit level) and raise it to 60% domestic value addition within five years, either at the mother unit, in case of an integrated unit, or at the project level, in case of a ‘hub and spoke’ structure.

The Scheme is expected to drive a direct investment of around INR 45,000 crore (US$6114 million) in ACC battery storage manufacturing projects. The ACC capacity created domestically is expected to lead to import substitution of around INR 20,000 crore (US$2717 million) every year.


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