What’s ailing India’s battery scheme for EVs? | Explained

The story so far: An ambitious ₹18,100 crore scheme to facilitate the manufacture of advanced chemistry cell batteries in India, particularly for Electric Vehicles (EVs), is floundering. The Advanced Chemistry Cell Production Linked Incentive (ACC PLI) had a target of making battery cells worth 50 gigawatt-hour (GWh) by 2025, but only 1.4 GWh has been installed; approximately 8.6 GWh is ‘under development’ but delayed, while 20 GWh has seen no progress at all. Additionally, the scheme has generated only 1,118 jobs — just 0.12% of the estimated 1.03 million — and attracted only 25.58% of its targeted investment.

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What are Advanced Chemistry Cells (ACC)?

They represent a new generation of advanced storage technologies that can store electric energy as chemical energy and convert it back to electric energy as and when required. Lithium-ions — the mainstay of cellphone batteries — are the most prominent today among this class of batteries. However, the scheme is “technology agnostic” and is open to other combinations such as nickel manganese cobalt, lithium-ion phosphate and sodium-ion batteries.

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What is the intent of this scheme?

The ACC PLI scheme, launched in October 2021, was designed to catalyse a domestic battery manufacturing ecosystem and reduce a near-total reliance on Chinese imports. However, an analysis by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research and Analysis reveals that the policy’s ambitious goals have yet to translate into significant realised capacity. As of October 2025, only 2.8% of the targeted 50 GWh capacity has been commissioned. The 1.4 GWh is from a single beneficiary, Ola Electric. Moreover, despite a targeted incentive disbursement of ₹2,900 crore by this period, zero funds have been paid out because no beneficiary has met the necessary milestones.

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How was the scheme supposed to work?

The primary aim of the scheme was to encourage industry into building domestic capacity for essential components like cathodes, anodes, and electrolytes. This was to be done by attracting major private players and global technology partnerships to the sector and in the process lower battery costs to accelerate the adoption of EVs and Energy Storage Systems (ESS). The latter are large blocks of battery cells that can be used to supply solar or wind power, during the night or windless days respectively. Companies were to participate in an auction to commit to a minimum bid size of 5 GWh and have a net worth of at least ₹225 crore per GWh of committed capacity and produce batteries. For every battery sold, they could claim up to ₹2,000 per KWh as subsidy. There were other caveats though: companies had to achieve 25% Domestic Value Addition (DVA) within two years and reach 60% DVA by the fifth year.

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Which companies were selected?

In the first auction round of the ACC PLI scheme, three companies were selected as beneficiaries: Ola Electric, Reliance New Energy, and Rajesh Exports. Ola Electric was awarded a capacity of 20 GWh; Reliance New Energy initially secured 15 GWh in the first round and subsequently won an additional 10 GWh in the second auction round; and Rajesh Exports was awarded a capacity of 5 GWh.

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Why has the scheme been unsuccessful?

The scheme mandates that beneficiaries commission their facilities within a two-year “gestation period,” a target deemed unrealistic for building complex gigafactories from scratch in a nascent market. Additionally, the DVA requirements have been difficult because India lacks sufficient facilities for processing minerals, lithium, nickel and cobalt. Secondly, the scheme’s evaluation criteria prioritised DVA and subsidy benchmarks over prior manufacturing experience. Thus, established battery players like Exide and Amara Raja did not qualify, leaving the project in the hands of novices who are still building foundational technical competencies. Finally, India’s dependency on China for raw material, technical competency and knowhow has led to sluggish progress. A major bottleneck is the delay in visa approvals for Chinese technical specialists, as India lacks skilled workforce for cell manufacturing.

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What fix does the report recommend?

Immediate recommendations include fast-tracking visas for technical experts and extending implementation timelines by at least one year to waive current penalties. Long-term success will require schemes for critical mineral refining and component manufacturing, alongside focused R&D and talent development.