Relevance: GS III (Economy – Indigenization of Technology & Infrastructure) | Source: The Hindu 

1. The Context: A Slow Start

A new report reveals that India’s ambitious Product Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) batteries is missing its targets.

• The Target: To build 50 GWh of battery manufacturing capacity by 2026.
• The Reality: As of October 2025, only 1.4 GWh (just 2.8%) has been commissioned (by Ola Electric).
• The Gap: Zero incentives have been disbursed so far because no company has met the sale/localization criteria yet.

2. About the ACC-PLI Scheme (Static GK)

• Nodal Ministry: Ministry of Heavy Industries (MHI).
• Outlay: ₹18,100 Crore.
• Goal: To reduce dependence on China (which dominates 80% of global supply) and make India a hub for EV batteries.
• The Carrot: A cash subsidy (up to ₹2,000 per kWh) for every battery cell manufactured and sold in India.
• The Stick: Strict localization norms—manufacturers must achieve 25% Domestic Value Addition (DVA) within 2 years and 60% within 5 years.

3. Why is it “Losing Steam”? (Key Hurdles)

The report identifies three structural flaws blocking progress:

• A. The “China Paradox” (Visa Wall):
  • Irony: To decouple from China, India needs Chinese tech first.
  • Issue: Setting up battery plants requires Chinese machinery and technical experts. However, delays in visa approvals for Chinese engineers (due to geopolitical tensions) have stalled factory installation.
• B. Flawed Auction Design:
  • High Barrier: The tender demanded huge investment capability, which favoured massive conglomerates (like Ola, Reliance, Rajesh Exports).
  • Exclusion: Experienced domestic battery players (like Amara Raja, Exide), who know the ground reality of manufacturing, were largely outbid or disqualified by newer players who made aggressive promises but lacked domain expertise.
• C. The “Raw Material” Trap:
  • India has almost no domestic processing capacity for Lithium, Cobalt, or Nickel. Achieving the mandated 60% localization is technically near-impossible without an upstream ecosystem (mines and refineries), leading to delays.

UPSC Value Box

Q. With reference to the “National Programme on Advanced Chemistry Cell (ACC) Battery Storage” (PLI Scheme), consider the following statements:

1. The scheme is administered by the Ministry of New and Renewable Energy (MNRE).
2. It mandates beneficiary firms to achieve a minimum of 60% domestic value addition within five years.
3. The scheme incentivizes the production of traditional lead-acid batteries along with lithium-ion batteries.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 only

(c) 1 and 3 only

(d) 2 and 3 only

Correct Answer: (b)