India’s ambitious Production Linked Incentive (PLI) scheme for advanced chemistry cell (ACC) batteries has developed only 1.4 gigawatt-hours (GWh) of manufacturing capacity against its target of 50 GWh, highlighting significant delays in the country’s efforts to build a domestic battery manufacturing ecosystem. A NITI Aayog assessment prepared in collaboration with IIM Ahmedabad found that commercial production had not yet commenced under the programme at the time of its evaluation.
The scheme, backed by an allocation of ₹18,100 crore, was designed to reduce India’s dependence on imported battery technologies and establish large-scale manufacturing capabilities for electric vehicles and energy storage systems. However, the report identified technological limitations, inadequate domestic supply chains, dependence on imported equipment and slower-than-expected electric vehicle demand as major reasons behind the slow progress. By March 2026, cumulative investment had reached ₹4,570 crore and employment generation stood at 1,245, but no incentive payments had been reported.
Battery PLI Scheme Falls Far Behind Its 50 GWh Target
The National Programme on Advanced Chemistry Cell Battery Storage was approved in May 2021 with a financial outlay of ₹18,100 crore.
Its primary objective was to establish 50 GWh of domestic ACC battery manufacturing capacity through incentives for companies setting up large-scale production facilities in India. The programme also includes an additional 5 GWh target for niche battery technologies.
Advanced chemistry cells are used in electric cars, two-wheelers, buses and stationary energy storage systems. Building domestic production capacity is considered important for India’s electric mobility ambitions and its broader clean-energy transition.
However, the NITI Aayog report found that only around 1.4 GWh of capacity had been developed against the main 50 GWh target.
<text weight=”semibold” color=”default”>Progress under the ACC battery PLI scheme</text>
| Parameter | Reported position |
|---|---|
| Total scheme allocation | ₹18,100 crore |
| Targeted ACC capacity | 50 GWh |
| Capacity developed | 1.4 GWh |
| Investment through March 2026 | ₹4,570 crore |
| Employment generated | 1,245 |
| Commercial production | Not yet commenced |
| Incentives disbursed | None reported |
The developed capacity represents just 2.8% of the main manufacturing target. The report said most beneficiary companies were still concentrating on infrastructure development and establishing production facilities.
Why India’s Battery Manufacturing Projects Are Facing Delays
The NITI Aayog assessment identified several structural challenges affecting the programme.
One of the biggest problems is India’s limited domestic technological capability in advanced battery manufacturing. The country continues to depend on foreign technology and expertise, making it difficult for manufacturers to independently establish and scale sophisticated battery production.
The report also highlighted the absence of a well-developed domestic supply chain for critical battery materials and components.
These include:
- Cathodes: Key battery components that influence energy density, performance and cost.
- Anodes: Components that store and release lithium ions during charging and discharging.
- Lithium: A critical mineral used in several major rechargeable battery chemistries.
- Cobalt: A mineral used in certain battery chemistries to improve performance and stability.
India’s limited domestic capabilities in these areas create challenges for manufacturers seeking to increase local production and meet the scheme’s localisation requirements.
The report also pointed to dependence on imported machinery, project execution delays and shortages of skilled manpower as additional obstacles.
Domestic Value Addition Requirements Add Pressure on Manufacturers
Another challenge identified by the assessment is the domestic value addition requirement under the scheme.
Beneficiary companies must progressively increase the share of manufacturing value created within India.
The requirements include:
| Manufacturing milestone | Minimum domestic value addition |
|---|---|
| End of second year | 25% |
| End of fifth year | 60% |
These requirements are intended to ensure that the programme creates genuine domestic manufacturing capabilities rather than supporting factories that primarily assemble products using imported components.
However, NITI Aayog observed that the localisation targets appear difficult to achieve given India’s current industrial capabilities.
Manufacturers need access to domestic suppliers, battery materials, specialised machinery, technical expertise and component-processing facilities to increase local value addition.
When these supporting industries are not sufficiently developed, companies can face delays in establishing production lines and meeting the required thresholds.
The assessment therefore identified a policy challenge: India wants to build a highly localised battery industry, but the upstream manufacturing ecosystem needed to achieve that objective is still developing.
No Incentive Payments Despite ₹4,570 Crore Investment
The absence of incentive disbursements is another important indicator of the scheme’s progress.
Under the ACC battery PLI programme, financial incentives are linked to actual battery production and sales. Beneficiary companies must also satisfy prescribed requirements relating to investment, manufacturing capacity and domestic value addition.
Because commercial production had not commenced at the time of the assessment, no incentive payments had been reported.
The programme had nevertheless attracted cumulative investment of ₹4,570 crore by March 2026 and generated employment for 1,245 people.
This demonstrates that some investment and infrastructure development have taken place, even though the scheme has not yet reached the production stage required to trigger incentive payments.
The report also highlighted that one beneficiary company had been disqualified for suppression of material facts. It did not establish that all participating companies had faced similar compliance issues.
Slower Electric Vehicle Demand Has Affected Investment
The battery manufacturing slowdown is also connected to demand conditions in India’s electric vehicle market.
The NITI Aayog assessment said slower-than-expected growth in EV demand had dampened the pace of investment.
Battery manufacturing requires substantial upfront capital. Companies must invest in production facilities, machinery, technology and supply chains before factories can operate at scale.
If demand projections become uncertain, manufacturers may reconsider the timing of investment and capacity expansion.
This creates a difficult relationship between battery production and electric vehicle adoption.
Affordable electric vehicles require reliable access to competitively priced batteries. At the same time, battery manufacturers need sufficient demand from vehicle producers and energy storage companies to justify large-scale production.
The report suggested that the scheme’s delays are not simply the result of temporary market conditions. Technology gaps, supply-chain limitations and implementation challenges have created deeper structural constraints.
Government Data Shows Battery Capacity Is Still Being Installed
The Ministry of Heavy Industries had also provided an update on the ACC battery programme in Parliament in March 2026.
According to the government’s statement, 40 GWh of the 50 GWh target had been awarded to four beneficiary companies.
These included ACC Energy Storage, Ola Cell Technologies and two Reliance New Energy entities.
At that point, the government reported that Ola Cell Technologies had installed 1 GWh of capacity, while the other three beneficiaries had not reported installed capacity.
The parliamentary update and the later NITI Aayog assessment reflect different reporting snapshots and measures. The government’s March figures referred to installed capacity reported by beneficiaries, while the assessment subsequently reported approximately 1.4 GWh developed against the target.
The distinction is important because awarded capacity, installed capacity and commercial production represent separate stages of a manufacturing project.
A company receiving an allocation does not mean that its factory is operational. Similarly, installing production equipment does not automatically mean that commercial battery output has begun.
What the Delays Mean for India’s Electric Vehicle Industry
India’s dependence on imported battery cells remains an important challenge for its electric mobility industry.
Battery packs account for a substantial share of the manufacturing cost of electric vehicles. Domestic cell manufacturing could eventually help reduce supply-chain risks, improve access to battery technology and support the development of local component suppliers.
The delay in the PLI programme means that the expected benefits of large-scale domestic battery production have not yet materialised.
Electric two-wheelers, passenger vehicles, commercial fleets and energy storage projects will continue to require dependable battery supplies as their markets expand.
The development of domestic manufacturing could also create opportunities for companies involved in battery materials, chemicals, recycling, testing equipment and specialised engineering.
However, achieving these benefits will require more than installing production capacity. Manufacturers must demonstrate reliable commercial output, competitive costs and increasing domestic value addition.
The Bigger Picture
The ACC battery PLI scheme highlights the complexity of building an advanced manufacturing ecosystem through financial incentives.
India’s ₹18,100 crore programme has attracted investment and supported early infrastructure development, but the gap between the 50 GWh target and the 1.4 GWh capacity reported by NITI Aayog shows how much work remains.
The challenge extends beyond individual factories. Battery manufacturing depends on access to minerals, chemical processing, component suppliers, technology, skilled workers and a sufficiently large customer base. Weakness in any of these areas can slow the entire production chain.
The assessment does not suggest that the programme has no long-term potential. Instead, it indicates that the expected industrial impact will take longer to emerge than originally anticipated. The effectiveness of the scheme will ultimately depend on whether announced investments translate into commercial production and competitive domestic manufacturing.
Looking Ahead
The next major milestones for the battery PLI programme will be the commissioning of manufacturing facilities, the beginning of commercial production and progress towards domestic value addition requirements. Companies will also need to develop stronger supply chains for cathodes, anodes, minerals and specialised machinery. Until production begins, the programme will remain unable to deliver the incentive-linked manufacturing outcomes it was designed to support.
For India’s electric vehicle and energy storage industries, the development of a domestic battery ecosystem remains strategically important. The NITI Aayog assessment highlights that achieving the 50 GWh target will require improvements in technology access, project execution, skilled manpower and supplier capabilities. The long-term outlook remains positive, but the programme’s success will depend on converting investment commitments and factory construction into actual battery production.
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