Policy Update
Aditya Chavan
Background
India’s electric vehicle and energy storage ambitions depend heavily on imported battery cells. India has historically relied heavily on imported lithium-ion battery cells for EVs, consumer electronics and grid storage, largely sourced from China, leaving India’s clean-energy transition exposed to global supply chains it does not control (Institute for Energy Economics and Financial Analysis & JMK Research and Analytics, 2026). To address this, the Union Cabinet approved the Production Linked Incentive (PLI) Scheme for the National Programme on Advanced Chemistry Cell (ACC) Battery Storage on 12 May 2021, with a budgetary outlay of Rs 18,100 crore, administered by the Ministry of Heavy Industries (MHI) (Ministry of Heavy Industries, n.d.).
The scheme set out to build 50 gigawatt-hours (GWh) of domestic ACC manufacturing capacity, enabling India to “leapfrog” from a fossil-fuel-based transport system towards cleaner, more efficient electric mobility, while also strengthening grid-scale battery storage. It was positioned alongside two companion programmes, the PLI Scheme for Automobile and Auto Components (Rs 25,938 crore) and the FAME Scheme (Rs 10,000 crore), as part of a coordinated push towards electric mobility (Press Information Bureau, 2022).
The underlying logic was straightforward: battery cells make up the single largest cost component of an electric vehicle, so building that capacity domestically was expected to reduce import dependence, cut India’s oil import bill as EV adoption rises, and create a complete domestic battery supply chain, from raw materials to finished cells (Press Information Bureau, 2022).
Functioning & Methodology
Unlike a capital subsidy paid upfront, the ACC PLI scheme is performance-linked: under the scheme guidelines, incentive eligibility is tied specifically to a beneficiary’s sales of ACC cells manufactured at its approved facility, disbursed over the five-year Performance Period running from 1 January 2025 to 31 December 2029 (Ministry of Heavy Industries, n.d.). Each selected firm must set up a minimum 5 GWh manufacturing facility, achieve a domestic value addition (DVA) of at least 25 per cent at the outset, rising to 60 per cent within five years, and make a mandatory investment of Rs 225 crore per GWh of committed capacity within two years. The scheme is technology-agnostic, allowing firms to choose their own cell chemistry and equipment (Ministry of Heavy Industries, n.d.).
The scheme follows a structured timeline built around an “Appointed Date”: a two-year Gestation Period (1 January 2023 to 31 December 2024), during which facilities are meant to be constructed, followed by a five-year Performance Period (1 January 2025 to 31 December 2029), during which incentives are paid out based on actual battery sales. Firms that fail to commission on schedule face a penalty of 0.1 per cent of their performance security for every day of delay (Ministry of Heavy Industries, n.d.; Institute for Energy Economics and Financial Analysis & JMK Research and Analytics, 2026).
Capacity is allocated through a competitive global tender, evaluated on a Quality and Cost Based Selection (QCBS) basis that scores bidders on technical and financial criteria, including proposed capacity, domestic value addition and subsidy benchmarks. The first tender, floated in October 2021, drew 10 bids; four companies were awarded a cumulative 50 GWh in March 2022, with manufacturing agreements signed in July 2022 (Press Information Bureau, 2022). After one winner’s capacity became available for reallocation, a second tender in 2024 drew seven bids worth a combined 70 GWh for just 10 GWh on offer (Press Information Bureau, 2024).
Key Findings
In the first allocation round, Reliance New Energy Solar Limited, Ola Electric Mobility, Hyundai Global Motors and Rajesh Exports were awarded 5 GWh, 20 GWh, 20 GWh and 5 GWh respectively. Hyundai Global Motors subsequently withdrew its 20 GWh allocation, leaving three firms holding a combined 30 GWh. Of the 20 GWh this freed up, 10 GWh was re-tendered and awarded to Reliance Industries Limited in September 2024, after it outscored six other shortlisted bidders, including Amara Raja and Waaree Energies, on a combined technical and financial basis. This brings total allocated, but not yet commissioned or operational, capacity to 40 GWh of the original 50 GWh target (Press Information Bureau, 2022, 2024). As discussed below, the remaining 10 GWh has since been earmarked for Grid-Scale Stationary Storage applications and put out to a fresh global tender in July 2026.
Actual progress on the ground has fallen far short of these allocations. According to a January 2026 assessment by JMK Research and the Institute for Energy Economics and Financial Analysis (IEEFA), only 2.8 per cent of the targeted 50 GWh, just 1.4 GWh, had been commissioned within the stipulated timeline as of October 2025, and that capacity came entirely from Ola Electric. Of the 40 GWh allocated, IEEFA reported that only Reliance Industries’ second-round award had indicated it was on track for timely commissioning; Reliance New Energy Solar’s first-round 5 GWh remained delayed, and Rajesh Exports’ progress was limited to land acquisition, with reports of financial discrepancies further clouding its prospects (Institute for Energy Economics and Financial Analysis & JMK Research and Analytics, 2026).
More recent official data, given by the Ministry of Heavy Industries in a written reply to the Lok Sabha on 23 July 2026, showed that beneficiary firms had cumulatively invested Rs 5,180 crore and generated 1,277 direct jobs as of 31 May 2026, but that no firm had yet claimed any incentive under the scheme, since manufacturing capacity remained to be substantially commissioned (ANI, 2026).
Figure 1. ACC PLI Scheme: Target vs. Allocated vs. Commissioned Capacity
Source: Institute for Energy Economics and Financial Analysis & JMK Research and Analytics (2026); Press Information Bureau (2022, 2024).
Ola Electric itself has scaled back its ambitions, now planning to commission only 5 GWh of its 20 GWh allocation by FY2029, rather than its full awarded capacity, diluting one of the scheme’s largest original commitments. IEEFA’s analysis also points to a wide gap on other metrics, though these comparisons rest on IEEFA’s own independent estimates of the scheme’s employment and investment potential rather than an officially published MHI target. Against IEEFA’s estimated potential of 1.03 million jobs, the scheme had generated only 1,118 jobs, or 0.12 per cent, as of October 2025; the subsequent official Lok Sabha figure of 1,277 direct jobs as of 31 May 2026 remains far below this estimate.
IEEFA similarly estimated investment of roughly Rs 2,870 crore, about 25.6 per cent of the Rs 11,250 crore implied by the scheme’s mandatory investment formula applied to its full 50 GWh target, not the 40 GWh allocated so far; the more recent official figure of Rs 5,180 crore invested as of 31 May 2026 represents about 46 per cent of that same full-scheme benchmark. Because the scheme is performance-linked, no incentive payments had been disbursed as of either assessment, since no firm had yet reached commercial-scale sales (Institute for Energy Economics and Financial Analysis & JMK Research and Analytics, 2026; ANI, 2026).
Figure 2. ACC PLI Scheme: Achievement Against Targets, as of October 2025
Source: Institute for Energy Economics and Financial Analysis & JMK Research and Analytics (2026).
IEEFA’s assessment also flags what it characterises as a design weakness in how bidders were evaluated. Among all applicants across both tender rounds, only Exide Industries and Amara Raja, both established battery manufacturers, had prior experience in the sector, yet both were placed on the waiting list rather than selected in either round. According to IEEFA, the QCBS scoring rewarded proposed capacity, domestic value addition and subsidy benchmarks more heavily than manufacturing experience, which, in its assessment, meant capacity was allocated largely to firms with limited prior track records in cell manufacturing (Institute for Energy Economics and Financial Analysis & JMK Research and Analytics, 2026).
Policy Significance
The ACC PLI scheme remains significant as one of India’s most ambitious attempts at import substitution in a strategically important technology. By tying incentives to actual battery sales rather than upfront investment, the scheme was designed so that disbursements are conditional on beneficiaries meeting specified performance milestones and achieving commercial-scale sales, rather than being paid as an upfront capital subsidy. Its scale and the overwhelming bidder interest in both tender rounds indicate strong industry interest in participating in India’s battery manufacturing programme.
The scheme also sits within a broader industrial strategy. Alongside the PLI for Automobile and Auto Components and the FAME scheme, it was meant to build an integrated electric mobility ecosystem spanning cells, vehicles and charging demand, rather than addressing battery manufacturing in isolation (Press Information Bureau, 2022). The gap between its ambition and its delivery so far makes it a useful test case for how India designs and sequences similar high-stakes industrial policy in other critical sectors, including semiconductors and critical minerals.
Emerging Issues
The single biggest issue is the scale of the implementation gap itself. More than five years after Cabinet approval, and nearly two years past the scheme’s original capacity target for 2025, only 1.4 GWh of the targeted 50 GWh had been commissioned as of October 2025. IEEFA’s assessment characterises India’s dependence on imported lithium-ion battery cells as remaining close to 100 per cent as of that same period, largely unchanged from when the scheme was launched (Institute for Energy Economics and Financial Analysis & JMK Research and Analytics, 2026).
Several structural bottlenecks explain this gap. The mandatory two-year construction timeline proved aggressive for giga-scale manufacturing facilities; the domestic value addition requirements were difficult to meet given India’s limited upstream capacity in cell components and critical minerals; and firms reported delays in securing visas for the Chinese technical specialists needed to install specialised cell-manufacturing equipment, an irony given the scheme’s own import-substitution goals (Institute for Energy Economics and Financial Analysis & JMK Research and Analytics, 2026).
The evaluation framework compounds these problems. Because QCBS scoring favoured proposed capacity and subsidy benchmarks over manufacturing experience, several of the scheme’s major beneficiaries entered cell manufacturing with limited prior expertise, while experienced players such as Exide and Amara Raja were left on the waiting list in both rounds. IEEFA suggests this mismatch between who was selected and who had prior technical capability may be one contributing factor behind the lag in commissioning relative to allocation, though its assessment does not establish this as the sole or primary cause.
The scheme has also become entangled in trade friction. China lodged a complaint at the World Trade Organization in October 2025, formally designated DS642, alleging that the ACC PLI scheme, the PLI Scheme for Automobile and Auto Components, and the Scheme to Promote Manufacturing of Electric Passenger Cars in India collectively discriminate against imported goods by linking subsidies to domestic value addition. China first requested a dispute settlement panel on 15 January 2026; India blocked this request at the Dispute Settlement Body’s meeting on 27 January 2026, but a panel was established after China’s renewed request, which could not be blocked a second time under WTO rules.
The panel was formally composed, with agreed panelists, on 28 May 2026, with Australia, Canada, the European Union, Japan, the United Kingdom, the United States and several other WTO members reserving third-party rights, adding a layer of legal uncertainty to a scheme already behind schedule (World Trade Organization, 2026; Business Today, 2026).
Way Forward
Closing the gap between the ACC PLI scheme’s ambition and its delivery will require action on several fronts simultaneously, rather than simply extending deadlines.
1. Enforce commissioning deadlines while addressing genuine bottlenecks: The government should continue applying the existing daily penalty for delayed commissioning to maintain discipline, but should also expedite visa clearances for essential technical specialists and provide clarity on domestic value addition compliance, since these are implementation frictions rather than reasons to dilute the scheme’s core targets.
2. Re-tender the remaining capacity with a revised evaluation framework: Now that the remaining 10 GWh has been put out to a fresh global tender for Grid-Scale Stationary Storage applications, with bids due by 13 October 2026, the QCBS scoring methodology for this round should give greater weight to demonstrated manufacturing experience, so that firms with a genuine track record in battery or precision manufacturing are not consistently outscored by newer entrants on paper criteria alone.
3. Build the upstream supply chain the scheme assumed would exist: Since the domestic value addition requirements depend on local availability of cell components and critical minerals, a dedicated policy framework covering critical mineral sourcing and refining, alongside incentives for cell components and equipment manufacturing, would address a root cause of the DVA compliance difficulties beneficiaries have faced.
4. Introduce complementary trade measures carefully: Tariff measures such as basic customs duty or anti-dumping duty on imported cells could improve the commercial case for domestic manufacturing, but these should be calibrated and sequenced with the ongoing WTO dispute in mind, so as not to add further grounds for a trade challenge.
5. Support testing, certification and recycling infrastructure: Beneficiaries need access to domestic cell testing and certification facilities, which are currently limited, as well as a nascent battery recycling ecosystem; building these would reduce reliance on overseas testing and improve the long-term sustainability of the domestic supply chain.
6. Actively court experienced global battery manufacturers: Rather than relying solely on the existing beneficiaries, the government could use the ongoing 10 GWh Grid-Scale Stationary Storage tender, and any future rounds, to specifically attract established international battery players willing to transfer technology and expertise, strengthening domestic capability rather than only domestic capacity.
Taken together, these steps point to a single underlying priority: the ACC PLI scheme needs a frank, evidence-based course correction based on why commissioning has lagged so far behind allocation, rather than a simple extension of existing deadlines. The effectiveness of the scheme’s import-substitution objective will depend on whether its implementation can be realigned with the technical and supply-chain realities identified in the assessment discussed above.
References
ANI. (2026, July 21). No firm claimed incentives under ACC battery PLI scheme despite Rs 5,180 crore investment. https://aninews.in/news/business/no-firm-claimed-incentives-under-acc-battery-pli-scheme-despite-rs-5180-crore-investment20260721193025/
Business Today. (2026, February 24). WTO sets up dispute panel on China’s complaint against India’s PLI schemes.
https://www.businesstoday.in/latest/corporate/story/wto-sets-up-dispute-panel-on-chinas-complaint-against-indias-pli-schemes-517828-2026-02-24
Institute for Energy Economics and Financial Analysis & JMK Research and Analytics. (2026, January 22). Only 2.8% of target capacity delivered yet under India’s battery manufacturing incentive scheme.IEEFA. https://ieefa.org/articles/only-28-target-capacity-delivered-yet-under-indias-battery-manufacturing-incentive-scheme
Ministry of Heavy Industries. (n.d.). PLI Scheme for National Programme on Advanced Chemistry Cell (ACC) Battery Storage. Government of India. Retrieved October 1, 2026, from
https://heavyindustries.gov.in/en/pli-scheme-national-programme-advanced-chemistry-cell-acc-battery-storage
Press Information Bureau. (2022, March 24). Allotment made for 50 GWh of battery capacity to 4 successful bidders for incentive under (PLI) Scheme for Advanced Chemistry Cell (ACC) Battery Storage. Ministry of Heavy Industries, Government of India.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=1809037
Press Information Bureau. (2024, September 4). MHI awards 10 GWh capacity to one bidder under PLI ACC scheme. Ministry of Heavy Industries, Government of India.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2051743
World Trade Organization. (2026). DS642: India — Measures concerning trade in the automotive and renewable energy technology sectors. https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds642_e.htm
About the Contributor
Aditya Chavan is an Economics undergraduate at Symbiosis School of Economics, Pune, with research interests spanning public policy, MSME development, financial inclusion, and economic governance. His work focuses on analysing government policies and institutional reforms aimed at fostering inclusive and sustainable economic development.
Acknowledgement
The author is grateful to IMPRI – Impact and Policy Research Institute for the opportunity to prepare this policy update, and acknowledges the guidance and feedback received during the review process, which helped strengthen the quality of this article.
Disclaimer
The views expressed in this article are solely those of the author and do not necessarily reflect the views of IMPRI or any affiliated institution.
Reviewers: Sandra Menon & Tanisha Hooda
Publisher : Prisha Sachdeva
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