Opportunity for Applicants to Avail Incentives for Battery Storage Capacity in India
The Indian government is set to invite tenders for the advanced chemistry cells (ACC) production-linked incentive (PLI) scheme with a 20-GWh capacity by December, according to an official familiar with the matter. This move presents an opportunity for applicants who did not qualify in the initial round or were unable to apply to benefit from incentives for creating battery storage capacity in the country. The Ministry of Heavy Industries is expected to conclude consultations with the Ministry of New and Renewable Energy by December, after which the application process for new bids will commence.
First Round of Awards and Subsequent Changes
In the first round of awards, three firms secured incentives under the ACC PLI scheme. Ola Electric qualified for the 20-GWh lithium-ion cell manufacturing, Reliance New Energy for 5-GWh sodium-ion cell manufacturing, and Rajesh Exports for 5-GWh lithium-ion cells. These companies committed a total investment of ₹27,000 crore ($3.6 billion) for the scheme. However, the 20-GWh capacity initially awarded to a Hyundai company was later deemed not bona fide, leading to a new round of bidding.
Criteria and Expectations for the Second Round
In the upcoming round of bidding, the government is unlikely to relax the criteria regarding the localization of cell manufacturing, which requires a minimum domestic value addition starting at 25% in the first year and increasing to 60% by the fifth year of production. The minimum capacity for bidding is also expected to remain at 5 GWh. The government anticipates greater participation this time, with over 15 applicants expressing interest, according to an anonymous government official.
Potential Participants and Future Plans
Suzuki Motor Co. and Tata Motors, who have committed ₹7,300 crore ($973 million) and ₹13,000 crore ($1.7 billion) respectively in cell manufacturing units in Gujarat, are likely to participate in the second phase of bidding if there are changes in the localization criteria or penalty provisions. Global lithium-ion battery firms such as Panasonic, Samsung, and LG Chem, which did not participate in the first round, may also consider applying for the ACC PLI scheme. Domestic battery firms like Amara Raja and Exide, who were wait-listed in the previous round, are expected to submit fresh bids.
India’s Dependence on Imported Lithium-ion Cells
India currently relies heavily on foreign markets for the import of lithium-ion cells for its electric vehicles, as there are no existing facilities in the country. The majority of cells are imported from China, as well as South Korea, Germany, and Japan. The Ministry of Heavy Industries reported that 10 bids were received from firms with a manufacturing capacity of 128 GWh under the ACC PLI scheme in the earlier phase.
Conclusion:
The Indian government’s decision to invite tenders for the ACC PLI scheme with a 20-GWh capacity presents a significant opportunity for companies to avail incentives for creating battery storage capacity in the country. While the criteria for localization and minimum capacity are expected to remain stringent, there is anticipation of increased participation in the second round of bidding. The involvement of global battery firms and domestic players, along with the government’s plans to sanction additional incentives for niche chemistries, highlights the growing focus on developing the battery manufacturing sector in India and reducing dependence on imports.
Leave a Reply