Analysis of PLI scheme for advanced chemistry cells in India

Cell technology has become a key driver of energy transformation as the world transitions to renewable energy and electric transportation. To reduce reliance on imported cells and promote domestic industry development, the Indian government launched the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) in May 2021. The scheme aims to boost India’s manufacturing capacities in the energy storage sector via financial incentives. InfoLink analyzes the scheme to provide manufacturers with subsidy details in the Indian cell industry.
 

Policy details

Incentive and budget amounts

The Indian government plans to allocate INR 181 billion (about USD 2.16 billion) over five years under the PLI scheme to establish 50 GWh of ACC production capacity and an additional 5 GWh of high-performance cell capacity in India. Capacity allocation will be conducted via tenders.
 

Subsidy details

Time limit: Manufacturing facilities must become operational within two years.

Domestic value addition and investment intensity requirements: Companies must achieve a domestic value addition of at least 25% within two years and increase it to 60% within five years, while also making the mandatory investment of INR 2.25 billion/GWh (about USD 27 million/GWh).

Subsidy disbursement: Subsidies will be disbursed quarterly over five consecutive years once manufacturing projects are commissioned and domestic value addition exceeds 25%. 

Subsidy calculation: The subsidy amount/kWh will be determined based on a review process.

Calculation formula: subsidy amount/kWh * percentage of value addition during the period * quantity of ACC sold (in kWh).

Subsidy cap: The maximum subsidy amount is capped at 20% of the cell sales price (excluding Goods and Services Tax).
 

PLI auction winners

The winners of the Round 1 auction of the PLI scheme were announced in March 2022. Four manufacturers were the successful bidders:

 
Source: Indian Ministry of Heavy Industries

Hyundai Global Motors withdrawn its name from the PLI scheme after Hyundai Motor Group made a global statement that it has no affiliation with Hyundai Global Motors, as the Indian government raised doubts about Hyundai Global Motors' compliance qualifications and canceled its awarded 20 GWh quota. The government re-tendered this 20 GWh in August 2024, with Reliance winning 10 GWh of this capacity, while another 10 GWh remains under review.

 
Source: Indian Ministry of Heavy Industries
 

Cell industry progress

With the PLI incentive, three of the winning bidders have unveiled their plans for lithium-ion battery gigafactories. So far, only Ola has made substantial progress.

Based on current plans, Reliance is set to be the first Indian manufacturer to be dedicated to the production of energy storage batteries, which will initially focus on the ESS assembly and then expand to energy storage battery production.

 
Source: Each company’s official websites
 

Conclusion

Based on the total incentive amount of USD 2.16 billion for 50 GWh, the subsidy per GWh is USD 43 million (about RMB 300 million), representing unprecedented support. However, numerous constraints are associated with the subsidies, making implementation challenging.
 

Technical barriers

Battery manufacturing involves complex technology R&D and stringent process requirements. Despite policy incentives for advanced cell technology investments, India has a relatively weak technical foundation.
 

Limited experiences led to potential delays

With the lack of experience building battery factories, meeting the policy requirement of being commissioned within two years poses significant challenges.
 

Delayed subsidies pressured companies’ initial funds

Under the PLI scheme, subsidies are disbursed quarterly once companies begin production and achieve at least 25% domestic value addition. Namely, companies must rely on their own funds to maintain construction in the early stages of projects. Given that lithium-ion battery manufacturing is capital-intensive, substantial upfront investments will increase operational burdens and challenge project sustainability.
 

Reliance on raw material supply chain

India is highly dependent on imports of critical raw materials such as lithium, cobalt, and the four primary materials of lithium-ion batteries. While the policy boosts local production, India is unlikely to resolve domestic supply issues in the short term. The import reliance makes it challenging to meet the domestic value-addition thresholds required by the policy, creating obstacles to achieving the intended targets of the PLI scheme.


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