What’s ailing India’s battery scheme for EVs?

Below is the complete UPSC study note, grounded in PIB (Tier 1) sources and the article excerpt (Tier 4).

What's Ailing India's Battery Scheme for EVs?

UPSC Prelims + Mains Study Note

1. At a Glance

• The Advanced Chemistry Cell Production Linked Incentive (ACC PLI) scheme is India's flagship ₹18,100 crore programme to build a domestic battery manufacturing ecosystem for EVs and renewable energy storage. [S1]
• As of early 2026, the scheme is severely underperforming: only 1.4 GWh installed out of a 50 GWh target, barely 1,118 jobs created vs. a projected 10.3 lakh, and only ~25.6% of targeted investment attracted. [S5]
• Critical for UPSC: intersects GS-III themes of industrial policy, energy security, import substitution, EV ecosystem, and China dependency.
• The scheme's struggles expose structural weaknesses in India's PLI framework when applied to deep-tech manufacturing with long gestation periods.

2. Why in the News

• A February 2026 analysis by IEEFA (Institute for Energy Economics and Financial Analysis) and JMK Research and Analysis revealed alarming underperformance: target of 50 GWh by 2025 missed catastrophically. [S5]
• Of 50 GWh allotted: 1.4 GWh installed, 8.6 GWh "under development" but delayed, and 20 GWh with zero progress. [S5]
• Rajesh Exports (one of four original awardees) reportedly exited; Hyundai and Ola Electric have shown limited on-ground progress.
• The Ministry of Heavy Industries (MHI) awarded a fresh 10 GWh capacity to one new bidder in a later round, and signed a Programme Agreement with Reliance New Energy Battery Limited for 10 GWh on 17 February 2025, signalling an attempt to revive the scheme. [S3][S4]

3. Background & Evolution

Predecessor context: India's battery imports (primarily from China) account for a significant share of EV component costs; the scheme was designed to mirror the success of the PLI for mobile manufacturing but in a far more capital- and tech-intensive sector.

4. Core Static Facts

• Scheme name: National Programme on Advanced Chemistry Cell (ACC) Battery Storage (PLI)
• Launch: Cabinet approval May 2021; operationalised October 2021
• Outlay: ₹18,100 crore [S1]
• Implementing Ministry: Ministry of Heavy Industries (MHI)
• Nodal Agency: MHI (under Department for Promotion of Industry and Internal Trade ecosystem)
• Total Capacity Target: 50 GWh (main) + 5 GWh "Niche" ACC [S1]
• Incentive structure: Set-up within 2 years; incentives disbursed over 5 years on domestic sales [S1]
• Technology stance: Technology-agnostic — higher incentives for superior technologies [S1]
• Eligible chemistries: Lithium-ion (Li-ion), Nickel Manganese Cobalt (NMC), Lithium Iron Phosphate (LFP), Sodium-ion [S5]
• Original awardees (4): Reliance New Energy Solar Ltd, Ola Electric Mobility Pvt Ltd, Hyundai Global Motors Co. Ltd, Rajesh Exports Ltd [S2]
• Jobs target: ~10.3 lakh (1.03 million); actual: 1,118 (~0.12% of target) [S5]
• Investment attracted: ~25.58% of target [S5]
• Expected import savings: ₹2,00,000–2,50,000 crore over programme period [S1]
• ACCs defined as: New-generation storage technologies converting chemical energy ↔ electric energy; broader than conventional lead-acid batteries [S1][S5]

5. Multi-Dimensional Analysis

Economic

• Scheme premised on import substitution: India imports near-100% of battery cells, predominantly from China, raising EV costs and widening the current account deficit. [S1][S5]
• PLI incentives are sales-linked, not capex-linked — this creates a chicken-and-egg problem: manufacturers must invest heavily before receiving any incentive, deterring risk-averse capital in an unproven tech segment. [S5]
• Only 25.58% of targeted investment attracted; job creation at 0.12% of target signals a failure of the PLI model for deep-tech manufacturing with long gestation cycles. [S5]
• Projected savings of ₹2–2.5 lakh crore in oil import bills remain theoretical. [S1]

Scientific / Technological

• Battery cell manufacturing requires gigafactory-scale investment, proprietary chemistry knowledge, and global supply chains for critical minerals (lithium, cobalt, nickel, manganese) — not easily replicable via fiscal incentives alone. [S5][S6]
• India lacks upstream critical mineral security (no significant lithium/cobalt domestic reserves); this is a structural barrier the PLI does not address. [S6]
• The scheme's technology-agnostic design, while flexible, may have diffused investment focus across too many chemistries. [S1][S5]
• Sodium-ion batteries are emerging as a lower-cost alternative but are at early commercial stage globally.

Geopolitical / Strategic

• Reducing dependence on Chinese battery imports is an explicit geopolitical objective — China dominates ~75–80% of global battery cell manufacturing. [S5]
• Failure of the scheme reinforces China's leverage over India's EV transition and clean energy ambitions under the Paris Agreement/NDC targets.
• India's PLI for solar PV modules faces similar import-substitution challenges, making this a systemic concern in industrial policy.

Environmental

• Without domestic battery manufacturing, India's EV adoption remains import-dependent and thus environmentally fragile in supply chain terms.
• Battery manufacturing involves hazardous chemical processes and end-of-life disposal risks — a domestic ecosystem requires simultaneous battery recycling regulations (not yet robust).
• Delay in EV battery production directly slows India's emission reduction trajectory under NDC commitments (net-zero by 2070). [S6]

Administrative / Governance

• Rajesh Exports' exit and delays by Ola Electric and Hyundai reveal weak due diligence in awardee selection — market credibility vs. manufacturing capability mismatch.
• The 2-year setup window is grossly inadequate for gigafactory-scale battery plants (global benchmark: 3–5 years for greenfield facilities).
• Absence of demand-side aggregation (no guaranteed offtake by government fleets/DISCOMS) undermines the business case for awardees.
• Scheme lacks milestone-based accountability with enforceable exit clauses and performance bonds.

Legal / Constitutional

• Implemented under the broader PLI framework (Cabinet Decision, May 2021); no dedicated statute — relies on executive/administrative order.
• Incentive disbursement rules governed by Programme Agreements (bilateral contracts between MHI and awardees) — disputes would fall under contract law/arbitration, not a sector-specific regulatory body.

6. Recent Developments (Last 12–18 months)

• 17 February 2025: Programme Agreement signed between MHI and Reliance New Energy Battery Ltd for 10 GWh capacity under ACC PLI. [S4]
• 2024: MHI awarded 10 GWh capacity to one new bidder in a supplementary round after original awardee(s) faltered. [S3]
• February 2026: IEEFA + JMK Research report publicly quantifies scheme's failure — only 1.4 GWh installed, 8.6 GWh delayed, 20 GWh stalled. [S5]
• 2025 (missed deadline): The scheme's original 50 GWh target year passed with less than 3% capacity realised.
• Ongoing parliamentary questions (PIB, 2024–25) reveal MHI's acknowledgment of delays and revised timelines. [S9]

7. Prelims Hooks

1. The ACC PLI scheme was approved by the Union Cabinet in May 2021 with an outlay of ₹18,100 crore. [S1]
2. The scheme targets 50 GWh of ACC manufacturing capacity + 5 GWh of Niche ACC. [S1]
3. Implementing Ministry: Ministry of Heavy Industries (MHI), not MNRE or MoP. [S1]
4. The scheme is technology-agnostic — open to Li-ion, NMC, LFP, and sodium-ion chemistries. [S1][S5]
5. Four original awardees: Reliance New Energy Solar, Ola Electric, Hyundai Global Motors, Rajesh Exports. [S2]
6. Incentive structure: manufacturing facility set up in 2 years; incentives paid over 5 years on domestic sales. [S1]
7. As of early 2026, only 1.4 GWh installed — less than 3% of the 50 GWh target. [S5]
8. Jobs created: 1,118 — approximately 0.12% of the 1.03 million targeted. [S5]
9. Expected savings on oil imports from ACC PLI success: ₹2–2.5 lakh crore. [S1]
10. A Programme Agreement with Reliance New Energy Battery Ltd for 10 GWh was signed on 17 February 2025. [S4]
11. Total bids received in the original bidding round: 10 bids aggregating ~130 GWh — nearly 2.6× the 50 GWh on offer. [S7]
12. ACC stands for Advanced Chemistry Cell — stores electric energy as chemical energy and reconverts it. [S1][S5]
13. Investment attracted under the scheme as of early 2026: approximately 25.58% of target. [S5]
14. The scheme's analysis was published by IEEFA and JMK Research and Analysis (not government bodies). [S5]

8. Mains Relevance

GS Paper: Primarily GS-III (Indian Economy — industrial policy, energy, technology); secondary GS-II (governance, policy implementation)

Syllabus headings: - GS-III: Infrastructure: Energy, Ports, Roads, Airports, Railways; Growth and Development; Government Budgeting; Effects of Liberalization on the Economy; Industrial Policy - GS-II: Government Policies and Interventions; Implementation of Policies

Plausible Mains Questions: 1. "The Production Linked Incentive (PLI) model, while successful in mobile manufacturing, faces structural limits in deep-technology sectors. Critically examine with reference to the ACC battery scheme." (GS-III) 2. "India's EV ambitions are constrained by its dependence on Chinese battery imports. Analyse the challenges facing the domestic battery manufacturing ecosystem and suggest a policy roadmap." (GS-III) 3. "Evaluate the design and implementation failures of the ACC PLI scheme and discuss what governance reforms could make PLI instruments more effective for capital-intensive industries." (GS-II/III)

9. Related Topics to Study Next

10. Common Errors / Trap Areas

1. Wrong Ministry: Aspirants confuse MHI (implementing ministry) with MNRE (Ministry of New and Renewable Energy) or MoP (Ministry of Power). ACC PLI is under MHI.
2. Confusing targets: The main target is 50 GWh + 5 GWh Niche — do not quote 55 GWh as a single figure without qualification.
3. Mixing up PLI schemes: There are 14 PLI schemes; ACC PLI (₹18,100 crore) is distinct from PLI for White Goods, Solar PV, or Auto/Auto Components — which are also MHI schemes but with different outlays and targets.
4. "Technology-specific" trap: The scheme is explicitly technology-agnostic — a common wrong option in MCQs that claim it is restricted to lithium-ion.
5. Overstating awardee numbers: Originally 4 companies selected, but one (Rajesh Exports) effectively exited — current active awardees are fewer; Reliance joined later via a separate round.
6. Confusing IEEFA with a government body: IEEFA is an independent research organisation, not a government/statutory body — facts from its 2026 report are analytical, not official government data.

11. Sources

• [S1] Cabinet approves PLI scheme "National Programme on Advanced Chemistry Cell Battery Storage" — https://www.pib.gov.in/PressReleasePage.aspx?PRID=1717938 — (Tier 1)
• [S2] Allotment made for 50 GWh to 4 successful bidders under ACC PLI — https://www.pib.gov.in/PressReleasePage.aspx?PRID=1809037 — (Tier 1)
• [S3] MHI awards 10 GWh capacity to one bidder under PLI ACC scheme — https://www.pib.gov.in/PressReleasePage.aspx?PRID=2051743 — (Tier 1)
• [S4] Programme Agreement signed with Reliance New Energy Battery Limited for 10 GWh — https://www.pib.gov.in/PressReleasePage.aspx?PRID=2104281 — (Tier 1)
• [S5] "What's ailing India's battery scheme for EVs?" — Jacob Koshy, The Hindu BusinessLine, 1 February 2026 (article excerpt provided as primary source) — (Tier 4)
• [S6] Need for Advanced Chemistry Cell Energy Storage in India (Part II) — NITI Aayog — https://www.niti.gov.in/sites/default/files/2022-04/Capturing-Value-of-ACC-Battery-Manufacturing_web_1.pdf — (Tier 1)
• [S7] 10 bids (~130 GWh) received under ACC PLI — https://pib.gov.in/PressReleseDetailm.aspx?PRID=1790139 — (Tier 1)
• [S8] Three Companies signed Programme Agreement under ACC PLI — https://www.pib.gov.in/PressReleasePage.aspx?PRID=1846078 — (Tier 1)
• [S9] Advanced Chemistry Cell Batteries and Domestic Capacity (Parliamentary Q&A) — https://www.pib.gov.in/PressReleasePage.aspx?PRID=2202973 — (Tier 1)