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The automotive sector will receive subsidies worth  ₹57,000 crore as part of the PLI scheme. REUTERS
The automotive sector will receive subsidies worth 57,000 crore as part of the PLI scheme. REUTERS

PLI scheme powers up lithium-ion cell manufacturing

  • Automotive and industrial battery manufacturers such as Exide may also diversify into lithium-ion cell manufacturing

Companies are accelerating plans to produce lithium-ion cells in the country, hoping to take advantage of 18,000 crore worth of government subsidies announced last month, two people directly aware of the developments said.

The production-linked incentive (PLI) scheme announced by the Union government could spur these companies to start local manufacturing of lithium-ion cells in the next couple of years, the people said, requesting anonymity.

Tata Chemicals Ltd is likely to soon start building a manufacturing facility for lithium-ion cells in Gujarat, said the people cited above. The Tata group company is likely to seek incentives under the PLI scheme and may also export cells from India, the people said, adding that the company has acquired land for the proposed facility in the Dholera region of Gujarat.

Tata Chemicals has revived the manufacturing plans after a delay caused by the pandemic, one of the two people cited above said.

“Tata Chemicals has again started work on its lithium-ion cell manufacturing project. The company, along with other manufacturers, was waiting for the government to come out with the PLI scheme since it was in the works for some time now. They are expected to seek incentives under the scheme just like some of the other manufacturers," the person said.

A spokesperson for Tata Chemicals did not respond to emailed queries sent on Monday.

Lithium-ion cells are considered the heart of electric vehicles, but India still doesn’t have any manufacturing capability for such products. Currently, most of the electric vehicle makers import cells and batteries from China, the world’s top producer of lithium-ion cells.

The second person said automotive and industrial battery manufacturers such as Exide Batteries and Amara Raja may also diversify into lithium-ion cell manufacturing to qualify for the PLI scheme. “Most of these manufacturers have already shared their plans to get into lithium-ion battery manufacturing in India and the PLI scheme will definitely propel them to get into cell manufacturing in the coming years. Most manufacturers with plans to get into this new sector were waiting for the government to come up with this scheme," the person said.

On 11 November, the government announced incentives worth 3 trillion to encourage companies in 10 sectors to boost local manufacturing and increase exports. The automotive sector will receive subsidies worth 57,000 crore – the biggest chunk–as part of the scheme.

According to Suvranil Majumdar of World Bank, companies interested in manufacturing lithium ion cells have definitely been enthused by the of the PLI scheme announced by the government ( in line with Atmanirbhar Bharat) but challenges still remain regarding the supply of raw materials.

“In India 50-60% of the value can be done when it comes to marking cells, but the rest which includes raw materials will still have to be imported. Also, we still don’t have a large scalable market for such products in India, which can be a challenge in terms of investment planning," added Majumdar.

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