EV Battery Demand Prompts Government to Incentivize Battery Makers

As the EV industry and demand for energy storage grows, Nunns highlights that the government is considering incentives for locally manufacturing battery components. At the time of writing this report, the Ministry of Heavy Industries is evaluating which components of batteries, such as cathode, anode, electrolyte, and adhesive, require funding. Such discussions are in tune with today’s production-linked incentive or PLI scheme that envisages pep-up domestic production.

"Discussions are underway, but the scheme is not finalized yet. A call on the quantum of sops will be taken at a later stage," said a senior government official. This move reflects the government's commitment to reducing import dependency and strengthening the local ecosystem for electric mobility and battery storage.

The Centre's National Programme on Advanced Chemistry Cell (ACC) Battery Storage, launched in 2021, aims to build a manufacturing capacity of 50 GWh of ACC and 5 GWh of Niche ACC, with a budget of ₹18,100 crore. As part of this initiative, the first round of ACC PLI bidding concluded in March 2022, with key players such as Ola Cell Technologies and Reliance Industries securing significant capacities.

Furthermore, the government has introduced a viability gap funding scheme for battery energy storage systems (BESS) with ₹3,760 crore in support for a 4 GWh target by 2030-31.

Highlighting the challenges in component manufacturing, an industry official mentioned that while graphite to anode production is easier, more complex components like cathodes could warrant higher incentives. Vimal Anand, Joint Secretary, Ministry of Commerce & Industry, emphasized that while domestic capacity and consumption for batteries have reached a critical stage, export capacity still needs significant development.