MHI framing incentive scheme for manufacturing indigenous battery parts

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New Delhi: The ministry of heavy industries (MHI) is preparing a concept note to garner support for a scheme to promote domestic manufacturing of battery components, MHI joint secretary Vijay Mittal said.

“The ministry is currently developing a concept note aimed at bringing policymakers together to agree on specific schemes that will support the manufacturing of components. This support will involve financial systems, policy regulations, and ease of doing business,”  he told the India Battery Manufacturing and Supply Chain Summit 2025 on Wednesday,

The scheme will propose the stringent localization criterion as previous incentive schemes such as the production-linked incentives for automobiles and auto components (PLI-Auto), he added.

If the domestic value addition (DVA) is not above 50%, then the product will not be an indigenous product, Mittal said. “Any manufacturer producing goods in this country—be it ACC batteries or any other product—that possesses over 50% DVA is recognized as a Class 1 supplier and a genuine contributor to our requirements,” he said.

DVA is a localization yardstick used to measure the share of domestic components in the finished product.

Mint reported on 2 December that the government had started stakeholder consultations for an incentive-based scheme to promote the indigenous manufacturing of battery parts. 

Key battery components include anodes, cathodes, electrolytes, as well as copper and aluminium foils. Cathodes and anodes account for 21% and 15% of the cost of each battery unit, according to an industry report by OMI Foundation. 

In 2021, the government incentivized indigenous battery manufacturing with a production-linked incentive scheme for advanced chemistry cells (PLI-ACC). 

Under this scheme, the government targeted indigenous manufacturing of 50 gigawatt-hours (GWh) of battery capacity with a budgetary outlay of 18,100 crore. It has since approved incentives to various battery makers for a manufacturing capacity of 40 GWh.  

The last approval came in September 2024, when the MHI cleared incentives worth 3,620 crore to Reliance Industries Ltd for manufacturing 10 GWh of battery capacity under the PLI-ACC. 

Companies approved for incentives under the PLI-ACC will have to set up the manufacturing facility within two years, after which the incentives will be provided for five years on the sale of indigenously manufactured batteries.

Mittal said the promising outcome of the PM E-drive scheme will ensure demand for the batteries, as the adoption of electric vehicles rises. 

EV sales in India

Total electric vehicle sales for the April-November 2024 period rose to 1.3 million units, compared with about 1 million the year before, as per a ministry of heavy industries statement.

Electric vehicles and battery storage systems are likely to generate demand for the battery and battery components manufacturing sector over the next few years, as India undergoes the energy transition with a goal of becoming a net-zero economy by 2070. 

“India needs to add 3,000-4,000 gigawatts of renewable energy by 2047, a significant leap from our current 500-gigawatt target for 2030. Batteries are crucial for this transition, presenting an immense opportunity for India to excel in battery technology,” said Sriram Ramakrishnan, business head – energy systems, Reliance Industries Ltd, while addressing the battery manufacturing summit organized by the India Energy Storage Alliance (IESA).

Continued efforts to promote battery and battery component manufacturing in the country “will have great potential in terms of generating employment,” he said.

Ramakrishnan estimated the creation of about 500 manufacturing and research and development jobs for every gigawatt-hour of battery capacity manufactured.

 

 
 

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