Union Cabinet Approves Rs 18,100 Cr PLI Scheme For Battery Storage Manufacturing

The new scheme will lead to import substitution of around Rs 20,000 crore every year, said a government statement.

The union government approved 18,100 crore PLI scheme for promoting ACC battery manufacturing. (Getty Image)

New Delhi: Prime Minister Narendra Modi-led Union Cabinet on Wednesday approved the proposal for the implementation of the Production Linked Incentive (PLI) Scheme to manufacture (50) Giga Watt Hour (GWh) of Advanced Chemistry Cell  (ACC) and 5 GWh of "Niche" ACC with an investment of Rs 18,100 crore.

The proposal named 'National Programme on Advanced Chemistry Cell (ACC) Battery Storage' was mooted by the Department of Heavy Industry, aims direct investment of around Rs 45,000 crore in ACC Battery storage manufacturing projects.

The PLI scheme will lead to net savings up to Rs 2.5 lakh crore on account of oil import bill reduction during this program due to EV adoption as ACCs manufactured under the program are expected to accelerate EV adoption.

Besides, the new scheme will lead to import substitution of around Rs 20,000 crore every year, said a government statement.

"It will give a big push to electric mobility, benefiting 3-wheeler, 4-wheeler & heavy vehicles. Battery storage will benefit solar power plants, solar rooftop equipment, consumer electronics, railways, shipping. PLI to fuel domestic production of Battery storage equipment," said Union Minister Prakash Javadekar while addressing cabinet briefing.

ACCs are the new generation of advanced storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required.

Consumer electronics, electric vehicles, advanced electricity grids, solar rooftop, the major battery-consuming sectors are expected to achieve robust growth in the coming years. The dominant battery technologies will likely control some of the world's largest growth sectors.

While several companies have already started investing in battery packs, though the capacities of these facilities are too small compared to global averages, there still is negligible investment in manufacturing, along with value addition, of ACCs in India.

All the demand for the ACCs is currently being met through imports in India.

"The National Programme on Advanced Chemistry Cell (ACC) Battery Storage will reduce import dependence. It will also support the Atmanirbhar Bharat initiative. ACC battery Storage manufacturers will be selected through a transparent, competitive bidding process. The manufacturing facility would have to be commissioned within a period of two years. The incentive will be disbursed after that over a period of five years," said the government statement.

The incentive amount will increase with increased specific energy density and cycles and increased local value addition.

As per the scheme, each selected ACC battery Storage manufacturer would have to commit to setting up an ACC manufacturing facility of a minimum of five (5) GWh capacity and ensuring a minimum 60% domestic value addition at the project level within five years.

The manufacturing of ACCs will facilitate demand for EVs, which are proven to be significantly less polluting. As India pursues an ambitious renewable energy agenda, the ACC program will be a key contributing factor to reduce India's Green House Gas (GHG) emissions, which will align with India's commitment to combat climate change, said the statement.