The Union Cabinet on 12 May 2021 approved the proposal of the department of heavy industries for executing the 'Production Linked Incentive' (PLI) scheme in domestic battery manufacturing. Under the PLI scheme floated by the Central government, the Cabinet in November 2020 had approved Rs 18,000 crore for domestic manufacturing of Advanced Chemistry Cell (ACC) Battery Storage and reduced import dependence. Currently, the country's ACC demand is being met through imports.

What

  1. The nodal ministry thereafter proposed a National Programme on ACC Battery Storage’ for achieving manufacturing capacity of 50) GigaWatt-Hour (Gwh) of ACC and 5 GWh of "Niche" ACC. This was approved by the Cabinet on 12 May 2021.
  2. Each selected ACC battery Storage manufacturer would have to commit to set-up an ACC manufacturing facility of minimum 5 GWh capacity and ensure a minimum 60 per cent domestic value addition at the project level within five years.
  3. The beneficiary firms would have to achieve a domestic value addition of at least 25 per cent and incur the mandatory investment Rs 225 crore/GWh within 2 Years (at the Mother Unit Level) and raise it to 60 per cent domestic value addition within 5 Years, either at Mother Unit, in-case of an Integrated Unit, or at the Project Level, in-case of "Hub & Spoke" structure".
  4. The Centre is expecting to create direct investment to the tune of Rs 45,000 crore in ACC Battery storage manufacturing projects.
  5. The government is expecting demand for battery storage to primarily come from consumer electronics, electric vehicles, advanced electricity grids, solar rooftop sectors.
  6. The Centre is also expecting a boost to the electric vehicle market with the domestic battery storage manufacturing.

Flashback

  1. The government’s production-linked incentive scheme (PLI), instituted in April 2020 for large-scale electronics manufacturing in India, has gained significant traction over the past year.
  2. It offers a simple and direct incentive based on incremental sales, designed to boost domestic manufacturing and attract large investments in mobile phone and specified electronic component manufacturing units.
  3. In November 2020, the PLI scheme was extended to ten more sectors, including food processing, battery storage, automobile components and specialty steel.
  4. The PLI scheme is designed with four objectives: 1) Target specific product areas; 2) Introduce non-tariff measures in order to compete more effectively with cheap imports; 3) Blend domestic and export sales to make manufacturing competitive and sustainable; and 4) Promote manufacturing at home while encouraging investment from within and outside India.