India's 18,100-crore battery manufacturing scheme faces execution delays, with only 1 GWh operational out of 40 GWh awarded. Investors should monitor how companies like Ola, Reliance, and ACC Energy navigate high import dependence and global price pressures, which are impacting the feasibility of local production targets.
India's initiative to boost domestic battery manufacturing is facing significant operational hurdles, raising questions about the pace of the government's 18,100-crore Production-Linked Incentive (PLI) scheme for Advanced Chemistry Cells. While the government has awarded 40 GWh of manufacturing capacity to major players including Ola Cell Technologies, Reliance New Energy, and ACC Energy Storage, progress on the ground remains slow. Currently, only 1 GWh of this capacity is reported as operational, which is located at an Ola facility in Tamil Nadu.
Challenges in Production and Costs
The core challenge for these manufacturers is a heavy reliance on imported raw materials. Anode and cathode components, which account for more than 60 percent of total production costs, are still largely sourced from overseas. This creates a difficult situation for local manufacturers, as they must build a supply chain from scratch while competing against established international incumbents who benefit from much lower cost bases. The recent global collapse in battery cell prices has further squeezed the feasibility for new domestic entrants, who are trying to scale up in a difficult price environment.
Regulatory Uncertainty and Tender Delays
Policy and regulatory hurdles are also adding to the pressure on the sector. Recent government tenders for large-scale battery systems, intended for grid integration, have seen significant delays. The Ministry of Heavy Industries pushed the bid deadline from October to November following hundreds of queries from potential developers. Industry feedback suggests that concerns regarding technical benchmarks and the regulatory environment remain largely unaddressed, causing some developers to hesitate.
For the companies involved, the financial risk lies in the high capital spending required for these large projects versus the reality of production delays and market competition. Without a clear path to localizing the raw material supply chain, these firms may face continued pressure on profit margins. Investors should monitor the progress of these specific capacity projects, the timeline for future grid-level battery tenders, and any further government clarity on domestic value-addition requirements. The ability of these manufacturers to achieve stable, commercial-scale production while managing import costs will be the primary factor in determining the long-term viability of these investments.