India’s ₹18,100 crore production incentive scheme for battery cells is struggling, with less than 2 GWh capacity achieved against a 50 GWh target. Major players like Reliance, Ola Electric, and Rajesh Exports face hurdles including raw material dependence and technology gaps. This delay creates uncertainty for the domestic energy storage supply chain and puts pressure on capital-intensive expansion plans.
India’s ambitious attempt to build a large-scale advanced battery manufacturing base is hitting significant roadblocks. Launched in 2021, the government’s Production Linked Incentive (PLI) scheme set aside ₹18,100 crore to encourage companies to produce Advanced Chemistry Cells (ACC). The goal was to reach 50 gigawatt-hours (GWh) of local production capacity. However, latest data indicates that less than 2 GWh of capacity is currently operational, highlighting a wide gap between government targets and industrial reality.
The PLI scheme attracted major corporate names, including Ola Electric, two group entities of Reliance Industries, and ACC Energy Storage, a subsidiary of Rajesh Exports. Despite the financial support and the operational scale of these companies, progress has been slow. Several challenges have delayed the setup of large manufacturing plants. Companies are struggling with basic infrastructure requirements and a lack of specialized manufacturing expertise needed for modern battery production.
A core issue remains the heavy dependence on imported raw materials. Manufacturers in India still rely on global suppliers for essential components like anode and cathode materials. Furthermore, there are restrictions on transferring critical process technology, particularly from China, a major player in battery production. Without domestic breakthroughs in material science or a more stable supply of technology, it is difficult for firms to reach the efficiency levels required for profitable, mass-scale manufacturing.
For investors, this situation presents a complex picture. These manufacturing projects require massive capital spending. When capacity deployment is delayed, it can weigh on the cash flow and profit margins of the involved companies. While there is interest in new battery chemistries like sodium-ion as an alternative, these technologies are still moving from pilot testing to commercial use, which adds to the uncertainty.
Investors may monitor a few key factors moving forward. First, any revisions to the government’s incentive structures or timelines could be critical. Second, the ability of these companies to secure independent technology or find new raw material suppliers will determine how quickly they can scale. Finally, tracking the actual commissioning of production lines versus projected dates will be important to understand the real financial impact on the companies involved. If these bottlenecks persist, the sector may continue to face pressure in meeting its long-term manufacturing targets.