Government to reassess ₹18,100-Cr battery PLI scheme as key beneficiaries fall short of targets

News, 20 August 2025

India’s ₹18,100-crore Production-Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) batteries, launched with the ambitious aim of achieving 50 GWh of domestic capacity by 2029, has come under scrutiny as major awardees fail to meet production deadlines.

According to officials, only 40 GWh out of the targeted 50 GWh has been allocated so far and none has translated into commercial output. This lack of progress has prompted the Ministry of Heavy Industries to initiate a strategic review to re-evaluate the scheme’s trajectory and identify fresh pathways forward.

Key Players Lag Behind

The beneficiaries behind the allocated capacities include Ola Cell Technologies (20 GWh), Reliance Industries Ltd. (15 GWh), and Rajesh Exports (5 GWh) none of whom have commenced full-scale battery production. As a result, the government has withheld any disbursement of incentives under the PLI scheme to date. A total of 50 GWh of manufacturing capacity was to be developed, with incentives spread over five years post-production.

Extension Requests and Penalties

In light of missed deadlines, the three companies have formally requested a one-year extension, attributing delays to supply chain disruptions particularly in sourcing key equipment from China and local land acquisition challenges.

Meanwhile, penalties have been levied for non-compliance with the December 2024 milestone. Ola is penalised at ₹12.5 lakh per day, whereas Reliance and Rajesh Exports face ₹5 lakh per day sums that will be offset against future incentives.

Possible Reasons for Failure:

1. High Capital and Technology Challenges: Establishing advanced battery manufacturing infrastructure requires substantial investment, cutting-edge technology, and expertise. Many companies face difficulties in mobilizing the required capital and acquiring or developing the necessary technology locally.
2. Supply Chain Limitations: There are significant shortages and delays in securing critical raw materials such as lithium, cobalt, and other necessary components, which are essential for battery production. The lack of a robust supply chain hampers timely scaling.
3. Infrastructure and Logistics Issues: Developing the necessary infrastructure, such as specialized manufacturing facilities, testing labs, and reliable logistics, has been slower than anticipated.
4. Pricing and Market Uncertainty: Fluctuations in raw material prices and uncertainties in the electric vehicle (EV) market impact the profitability and motivation of companies to ramp up production as planned.
5. Delayed Policy Implementation and Approvals: Administrative delays, regulatory hurdles, and procedural complexities have slowed down project approvals, land acquisition, and environmental clearances.
6. Technology Development and Skill Gaps: Many Indian firms lack experience in advanced battery manufacturing, and technology transfer from global partners is often slow or limited.
7. Global Market Dynamics: International competition, trade barriers, and import dependence on critical raw materials create additional challenges for establishing a self-sufficient ACC battery industry.

Pending Government Response

The government has yet to make a final decision on extension requests or the implementation of penalties. The forthcoming review is expected to explore whether the scheme’s parameters including timelines, investment thresholds, and localisation mandates require recalibration.

Broader Implications for EV Battery Manufacturing

The stalling of India’s flagship PLI initiative in cell manufacturing underscores broader challenges in building a robust domestic battery ecosystem. These include limited local capacity, supply chain bottlenecks, and strategic dependency on imports particularly from China. Officials have emphasised that the 40 GWh allocated could be deployed across EVs, energy storage systems, and even defence applications, with 10 GWh earmarked for grid-scale stationary storage.

As the government reassesses its strategy, it must determine whether incentive structures, localisation targets, or procurement rules need modification to invigorate domestic battery production.

EDITORIAL NOTE: Failure, if ever, is not digital. The government should have intervened at every step, not just as a ‘class monitor’ but as a true partner. Active involvement, guidance, and support are essential to ensure success. Collaborative efforts and strategic interventions can bridge gaps, foster innovation, and guarantee initiatives like above reach their full potential and deliver real impact. And even after this, if there are unsurmountable walls, go back to the drawing board and start again, but please do not broadcast your failure.