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

The story so far: The ambitious ₹18,100-crore plan to facilitate manufacturing of advanced chemistry cell batteries in India, especially for Electric Vehicles (EVs), is floundering. The Advanced Chemistry Cell Manufacturing Linked Incentive (ACC PLI) had a target of producing 50 gigawatt-hours (GWh) worth of battery cells by 2025, but only 1.4 GWh has been installed; approximately 8.6 GWh is ‘under development’ but delayed; No progress has been seen in the 20 GWh area. In addition, the program created only 1,118 jobs (only 0.12% of the estimated 1.03 million jobs) and attracted only 25.58% of the targeted investment.

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What are Advanced Chemistry Cells (ACC)?

They represent a new generation of advanced storage technologies that can store electrical energy as chemical energy and convert it back into electrical energy when necessary. Lithium ions, the mainstay of mobile phone batteries, are the most prominent among this class of batteries today. But the plan is “technology neutral” 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 purpose of this plan?

The ACC PLI scheme, launched in October 2021, is designed to catalyze the domestic battery manufacturing ecosystem and reduce near-total dependence 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 targets have not yet translated into significant capacity. As of October 2025, only 2.8% of the targeted 50 GWh capacity has been commissioned. 1.4 GWh comes from Ola Electric, which is the sole beneficiary. Moreover, despite the targeted stimulus payment of Rs 2,900 crore so far, zero funds have been disbursed as no beneficiary has been able to meet the required milestones.

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How was the plan supposed to work?

The main objective of the program was to encourage industry to build domestic capacity for key components such as cathodes, anode and electrolytes. This would be done by attracting large private players and global technology partnerships into the sector and, in the process, reducing 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 provide solar or wind energy at night or on windless days, respectively. Companies would 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. They can claim subsidy of up to ₹2,000 per KWh for each battery sold. But there were other caveats: Companies had to achieve 25% Domestic Value Added (DVA) within two years and reach 60% DVA by the fifth year.

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Which companies were chosen?

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

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Why did the plan fail?

The plan requires beneficiaries to commission their facilities within a two-year “gestation period”; This is an unrealistic goal for building complex gigafactories from scratch in a nascent market. Additionally, DVA requirements have been difficult due to the lack of adequate facilities to process the mineral, lithium, nickel and cobalt in India. Second, the program’s evaluation criteria prioritized DVA and subsidy benchmarks based on previous production experience. Therefore, established battery players such as Exide and Amara Raja failed to qualify, leaving the project in the hands of novices who are still trying to develop basic technical competencies. Finally, India’s dependence on China for raw materials, technical competence and know-how has caused progress to slow down. The delay in visa approvals for Chinese technical experts is a major bottleneck as India does not have skilled labor for cell manufacturing.

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What fix does the report recommend?

Immediate recommendations include expedited visas for technical experts and extending implementation periods by at least a year to waive existing penalties. Long-term success will require focused R&D and talent development, as well as plans for critical mineral refining and component manufacturing.