Battery manufacturers secure Rs.18,100 crore output sops

Industry Outlook Team | Thursday, 13 May 2021

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India on Wednesday granted a ₹18,100 crore production-linked incentive (PLI) scheme for building Tesla-style giga factories to manufacture batteries.
The proposal, granted by the Union cabinet chaired by Prime Minister Narendra Modi, comes as the country facilitates steps to switch to electric vehicles to curb rampant pollution in its main cities and cut reliance on expensive oil imports.

The plan is to begin 50 giga watt hour (GWh) manufacturing capacity for advance chemistry cell batteries by attracting investments totaling ₹45,000 crore, as per the government. One GWh (1,000-megawatt hour) of battery capacity is sufficient to power 1 million homes for an hour and around 30,000 electric cars. AS per a report of 11 September about the ₹18,000 crore package being in the works for battery storage manufacturing.

The scheme titled the National Programme on Advanced Chemistry Cell (ACC) Battery Storage, under the department of heavy industry, may boost India’s green energy credentials. It is among the PLI schemes worth ₹1.97 trillion declared by the government last year for 13 sectors. The objective is to create global manufacturing champions in the country and appeal companies exploring a China-plus-one strategy for production.

“Each selected ACC battery storage manufacturer would have to commit to set up an ACC manufacturing facility of minimum 5GWh capacity and ensure a minimum 60% domestic value addition at the project level within five years," the government stated in a statement. The incentive would be paid out on the basis of sales, energy efficiency, battery life cycle, and localization levels.

“The beneficiary firms have to achieve a domestic value addition of at least 25% and make the mandatory investment of ₹225 crore /GWh within 2 years (at the mother unit level) and raise it to 60% domestic value addition within 5 years," the government added.

Such battery storages would provide not only to electric vehicles but also to the consumer electronics industry and electricity grids. This gains position given India’s ambitious clean energy targets and the intermittent nature of electricity from clean energy sources such as solar and wind. In such a situation, storage holds the solution for providing on-demand electricity from wind and solar projects. “All the demand of the ACCs is being met through imports in India. The National Programme on ACC Battery Storage will reduce import dependence. It will also support the Atmanirbhar Bharat initiative. ACC battery storage manufacturers will be selected through a transparent competitive bidding process," the government stated.