Delays in visa approvals for Chinese technical specialists, requirements mandating local production and a shortage of critical technologies threaten the government’s ambitious Advanced Chemistry Cell Production Linked Incentive (ACC-PLI) program, according to a report by research firms Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research and Analytics released earlier this week.
The program was launched in October 2021 with the aim of accelerating the domestic production of next-generation batteries.
However, as of October 2025, only 1.4 gigawatt-hours (GWh) worth of battery cells have been commissioned on time, while 8.6 GWh are in development but with delays. The plan for 2021 envisaged a production capacity of battery cells of 50 GWh by 2026.
Advanced Chemistry Cells are part of modern batteries using technologies such as lithium-ion to power electric vehicles and are different from the traditional lead-acid batteries that start a car or run inverters.
Launched by the Ministry of Heavy Industries in October 2021, the ACC-PLI scheme promised start-up battery makers who won the auction a certain amount of money for each battery they sold as a way to incentivize investment in the industry.
The government’s scheme also aimed to build a local battery supply chain (cathode, anode, electrolyte) to reduce import dependency, mobilize private investment and global technology partnerships, reduce battery costs and accelerate the adoption of electric vehicles (EVs) and energy storage.
China is currently the dominant supplier of such cells and one of the aims of the scheme is to reduce India’s dependence on the country. With an expenditure of ₹18,100 crore (US$2.08 billion), ACC-PLI sought to attract large companies by mandating a minimum investment of ₹1,100 crore (US$129.3 million).
In return, the companies would receive a maximum subsidy of ₹2,000 per KWH. Another mandate was for companies to ensure that 25% of production is local within two years and 60% within five years.
While several companies flocked to bid for 50 GWh of capacity in the initial round of auctions, only 30 GWh were actually allocated.
Ola Electric, Reliance New Energy, Hyundai Global and Rajesh Exports emerged as selected beneficiaries, although Hyundai Global eventually dropped out. None of the selected companies actually had expertise in battery manufacturing. Companies that had such a track record – Amara Raja and Exide Industries, albeit traditional lead – were dropped from the auction. “The high net worth requirement (minimum ₹2.25 billion per GWh) further limited participation in large companies,” the report said.
As none of the three companies have started selling batteries, no incentives have been paid to any beneficiary against the target of ₹2,900 crore by October 2025. Ola Electric has also scaled back its expansion plans and now aims to install only 5 GWh by financial year (FY) 2029. Rajesh Exports is lagging behind the most, with progress limited to land acquisitions, while reports of financial irregularities have further raised concerns about its ability to commission facilities in the near term, the report said.
“India lacks a mature ecosystem for cell manufacturing, including critical mineral refining and cell component manufacturing, leaving the industry almost entirely dependent on imports from China. Industry stakeholders also point to delays in approving visas for Chinese technical specialists needed to install equipment, further slowing progress.”
“Furthermore, scheme-related issues such as the aggressive two-year installation timeline and high advertising domestic value requirements pose significant challenges for PLI recipients with no previous battery manufacturing experience,” the report points out. “There is a significant gap between the intended and actual results of the ACC-PLI scheme. Against the estimated number of 1.03 million jobs, the scheme created only 1,118 jobs (0.12%).
The EV sector is the largest consumer of lithium batteries in India, accounting for roughly 70-80% of the total demand for batteries. EV sales in FY2024-25 grew by 15.3% year-on-year (YoY), significantly lower than the 49% growth forecast for 2022-2030.
Published – 23 Jan 2026 22:04 IST
