Centre Plans Rs 9,000 Crore PLI Scheme For Domestic EV Battery Component Manufacturing To Cut China Imports: Report

The central government is deliberating on a Rs 9,000 crore initiative to bolster the domestic manufacturing of battery components for electric vehicles (EVs) and clean energy systems, according to sources familiar with the matter. 

This potential scheme, spearheaded by the Union Ministry of Heavy Industries, was the subject of discussions with key industry stakeholders earlier this month. It will soon undergo inter-ministerial consultations, the sources, speaking anonymously, revealed to The Mint.

“These are initial talks underway now. A stakeholder consultation was held recently. The consideration is for incentives of about Rs 9,000 crore. Inter-ministerial consultations are likely to be held going ahead,” one of the individuals said.

The scheme aims to address the capital-intensive nature of electrode manufacturing, a key battery component responsible for electricity transfer, which requires extensive research and development for localised production. 

Reliance Industries, Hindalco, Ola Electric Mobility, Epsilon Advanced Materials, Amara Raja Energy & Mobility, Himadri Specialities, and other prominent firms were among the 30-40 companies that participated in the discussions.

With batteries comprising about 40 per cent of an EV’s cost—and electrodes, including cathodes and anodes, accounting for 21 per cent and 15 per cent of battery costs respectively—the push for domestic component manufacturing could significantly reduce EV prices, potentially equating them with traditional fuel-powered vehicles.

Despite the launch of the Rs 18,100 crore production-linked incentive (PLI) scheme for advanced chemistry cell (ACC) batteries in 2021, which allocated 40GWh capacity to Ola Electric, Rajesh Exports, and Reliance Industries, Indian manufacturers continue to rely heavily on imported components. 

The proposed scheme seeks to reduce this dependency, promoting India as a hub for green hydrogen and electrolyzer manufacturing.

“Currently, China supplies most components, including anodes and cathodes, to battery makers worldwide, just as it dominates ACC batteries,” said Debi Prasad Dash, president of the India Energy Storage Alliance (IESA), emphasising the need for a PLI-like scheme for such items to boost the Make In India initiative.

Vikram Handa, managing director of Epsilon Advanced Materials, lauded the government’s initiative, stating, “fiscal support for component manufacturing ecosystem in the ACC Sector like anode, cathode, electrolyte, and copper foil will prove as a significant step towards building a self-reliant and sustainable battery ecosystem. 

This will also attract investments, drive innovation, and reduce dependency on imports, and strengthen India’s role in the global battery supply chain.”

The discussions also align with the forthcoming phased manufacturing programme (PMP) under the PM E-Drive EV subsidy scheme, which will mandate the indigenization of EV components. This initiative will define timelines for curbing imports of specific components, further advancing India's clean energy objectives.

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