Challenges in India's Advanced Chemistry Cell Production Linked Incentive (ACC-PLI) Scheme

A report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research and Analytics highlights several challenges facing India's ACC-PLI scheme, which was launched in October 2021 to boost domestic, next-generation battery manufacturing.

Key Challenges

• Visa Delays: There are significant delays in visa approvals for Chinese technical specialists, impacting the installation of necessary equipment.
• Local Manufacturing Requirements: Mandates for domestic manufacturing, with 25% local production required within two years and 60% within five years, pose challenges for companies with no prior experience in battery manufacturing.
• Lack of Critical Technologies: India's battery manufacturing ecosystem lacks maturity, particularly in critical mineral refining and component production, leading to dependency on imports, especially from China.

ACC-PLI Scheme Details

• Launched to encourage investment in battery manufacturing by offering financial incentives for production.
• Aimed to develop a local supply chain for battery components to reduce import dependence.
• Outlay of ₹18,100 crore ($2.08 billion) with a minimum investment requirement of ₹1,100 crore ($129.3 million) for companies.
• Subsidy of ₹2,000 per KWH for participating companies.

Impact on Electric Vehicle (EV) Sector

• The EV sector is the largest consumer of lithium batteries, accounting for 70-80% of demand.
• EV sales growth was 15.3% in FY2024-25, lower than the predicted 49% growth from 2022-2030.

The ACC-PLI scheme faces significant hurdles in execution, primarily due to regulatory, technological, and logistical challenges, influencing its ability to meet its targets for domestic battery production and job creation.