India announced an ₹18,100 crore production-linked incentive scheme in 2021 for indigenously developed advanced chemistry cells (PLI ACC). ACCs are next-generation, high-efficiency energy storage technologies that can be used to power electric vehicles, back up renewable solar and wind grids and operate portable consumer electronics.
However, the plan for the FY25 to FY29 period is yet to gain traction, with the government having granted Ola Electric and Reliance Industries an extension of two years, allowing them to claim incentives for five years from FY27 to FY31. Mint explains.
What is the PLI ACC scheme?
The PLI ACC scheme is among 14 such programmes started by the Union government to build indigenous manufacturing capacity in key sectors. It has a ₹18,100 crore outlay to be disbursed as incentives for setting up 50 GWh of cell-making capacity.
The Centre awarded 20 GWh capacity to Ola Electric, 5 GWh to Rajesh Exports, 5 GWh to Reliance New Energy, a subsidiary of Reliance Industries, and 20 GWh to Hyundai Global Motors in 2022. However, the government revoked the award to Hyundai Global Motors after it became clear that the company was not affiliated to the Korean automaker.
Later, 10 GWh capacity of this quota was awarded to Reliance in 2024, and the remaining 10 GWh was earmarked for grid-scale energy storage, for which a tender was floated in July.
How did an extension of scheme timelines come into the picture?
According to an 11 March report by the Rajya Sabha department-related standing committee on industry, cell makers told the ministry of heavy industries that they faced supply challenges for specialized machines and skilled manpower from China, leading to delays in setting up capacity.
The committee recommended that the ministry review the progress made by all beneficiaries, provide conditional timeline extensions for verifiable constraints and reallocate the capacity awarded to non-performers.
What did the ministry of heavy industries do?
According to the committee’s 6 August action-taken report on the recommendations made in March, the ministry reviewed the progress made under the scheme and said it was examining requests from beneficiaries for an extension of up to two years to achieve PLI ACC milestones. The beneficiaries sought an exemption in light of Chinese control measures on lithium-ion cell-making equipment and raw material.
“The PLI ACC Scheme remained in its gestation period until December 2024. Further, lithium-ion cell manufacturing involves highly specialized and niche technology, which is presently at a nascent stage in India. As a result, beneficiary firms under the scheme have not been able to adhere to their pre-declared timelines for commencement of committed production. In addition, export control measures announced by China on certain lithium-ion cell manufacturing equipment and related raw materials have further impacted project implementation timelines,” the ministry told the parliamentary committee.
What were the original timelines?
The scheme was spread across seven years—the first two years being a gestation period to set up capacity, followed by five years of sales-based incentives. The government aimed to disburse ₹2,700 crore in FY25, ₹3,800 crore in FY26 and ₹4,500 crore in FY27 as sales-based incentives.
But cell-making capacity has languished, with only Ola Electric setting up 1.4 GWh, according to the 6 August report. The ministry was of the view that Ola would increase its capacity to 6 GWh and Reliance would set up 5 GWh—both by December.
What is the path ahead?
The ministry granted two-year extensions to Ola and Reliance, but Reliance's extension is only for the 5 GWh capacity awarded in the first round in 2022, Mint reported on 14 August.
Rajesh Exports did not get an extension. The company is under the scanner of the Securities and Exchange Board of India, which alleged financial misrepresentation to the tune of ₹15 trillion in June, Mint reported.
The 6 August report clarified the incentive-disbursal plan to some degree.
“The Budget Estimate (BE) for FY2026-27 in respect of the PLI ACC Scheme is ₹86 crore, which includes ₹70.30 crore under Grants-in-Aid earmarked for incentive disbursement to beneficiary firms,” the ministry told the parliamentary committee.
It added that any disbursal is subject to positive testing of the cells at government-accredited labs. The ministry said it plans to begin incentive disbursal in FY28.