Why in news?

India’s ₹18,100 crore Advanced Chemistry Cell (ACC) Production Linked Incentive scheme, aimed at building domestic battery manufacturing for electric vehicles, has made limited progress.

Against a target of 50 GWh capacity by 2025, only 1.4 GWh has been installed, with 8.6 GWh delayed and 20 GWh seeing no movement. The scheme has also delivered just 1,118 jobs—a fraction of the projected employment—and attracted only about a quarter of the intended investment, raising concerns over its effectiveness.

What’s in Today’s Article?

• About Advanced Chemistry Cells (ACC)
• ACC PLI Scheme: Big Ambitions, Limited Outcomes So Far
• How the ACC PLI Scheme Was Designed to Work?
• Why the ACC PLI Scheme Has Struggled?
• Recommended Fixes for Reviving the ACC PLI Scheme

About Advanced Chemistry Cells (ACC)

• Advanced Chemistry Cells are next-generation energy storage technologies that store electricity in chemical form and release it when needed.
• Lithium-ion batteries are the most widely used ACCs today, but India’s ACC scheme is technology-agnostic, allowing alternatives such as nickel manganese cobalt, lithium iron phosphate, and sodium-ion batteries.

ACC PLI Scheme: Big Ambitions, Limited Outcomes So Far

• Launched in October 2021, the Advanced Chemistry Cell (ACC) PLI scheme aimed to build a domestic battery manufacturing ecosystem and cut India’s heavy dependence on Chinese imports.
• However, various studies by experts show that progress has been minimal.
• As of October 2025, only 2.8% of the targeted 50 GWh capacity has been commissioned—1.4 GWh, all from Ola Electric.
• Despite a planned incentive payout of ₹2,900 crore by this stage, no funds have been disbursed, as none of the beneficiaries have met the required milestones.

How the ACC PLI Scheme Was Designed to Work?

• The ACC PLI scheme aimed to build domestic battery manufacturing capacity by incentivising private players to set up production of key components such as cathodes, anodes, and electrolytes.
• Companies were selected through an auction process, required to commit to at least 5 GWh capacity, meet minimum net worth criteria, and manufacture batteries domestically.
• In return, firms could claim subsidies of up to ₹2,000 per kWh for batteries sold.
• To ensure localisation, the scheme mandated 25% Domestic Value Addition within two years and 60% by the fifth year, with the broader goal of reducing battery costs and accelerating the adoption of electric vehicles and energy storage systems.
• In the first auction round of the Advanced Chemistry Cell (ACC) PLI scheme, three companies were selected: Ola Electric (20 GWh), Reliance New Energy (15 GWh initially, plus 10 GWh in the second round), and Rajesh Exports (5 GWh).

Why the ACC PLI Scheme Has Struggled?

• Unrealistic Timelines for Gigafactories - The scheme requires beneficiaries to commission facilities within a two-year gestation period, which experts consider impractical for setting up complex battery gigafactories from scratch in a nascent ecosystem.
• Challenging Domestic Value Addition (DVA) Norms - Meeting 25% DVA in two years and 60% in five years has been difficult because India lacks adequate processing capacity for key minerals like lithium, nickel, and cobalt.
• Selection Criteria Favoured New Entrants - The evaluation prioritised DVA and subsidy benchmarks over proven manufacturing experience. As a result, established battery makers such as Exide Industries and Amara Raja did not qualify, leaving the programme largely with relatively inexperienced players.
• Dependence on China for Inputs and Know-How - India’s heavy reliance on China for raw materials, technology, and expertise has slowed progress. Delays in visas for Chinese technical specialists—amid a shortage of domestic skilled labour for cell manufacturing—have become a major bottleneck.
• Foundational Capability Gaps - Many beneficiaries are still building basic technical and operational capabilities, further delaying commissioning and preventing the scheme from meeting its ambitious capacity, investment, and employment targets.

Recommended Fixes for Reviving the ACC PLI Scheme

• The report calls for immediate measures such as fast-tracking visas for technical experts and extending project timelines by at least one year to avoid penalising delayed facilities.
• For the long term, it recommends building domestic capabilities through schemes for critical mineral refining and component manufacturing, along with sustained investment in R&D and skill development to strengthen India’s battery ecosystem.