India’s Battery Cell Manufacturing Faces Setbacks Under PLI Scheme

India's ambitions to become a major player in battery cell manufacturing are encountering significant hurdles, as recent data reveals that less than 2 gigawatt-hours (GWh) of production capacity has been established under the government's Production Linked Incentive (PLI) scheme for advanced chemistry cells (ACC). This output falls drastically short of the original 50 GWh target set to bolster the country's cleantech infrastructure.

The PLI scheme, launched in 2021 with an allocation of ₹18,100 crore, aimed to stimulate investment and capacity building in battery cell production. It sought to reduce India's reliance on imports and develop a domestic supply chain for electric vehicle (EV) batteries and energy storage solutions. The initiative attracted interest from major industrial players, including Ola Electric, two subsidiaries of the Reliance Group, and Rajesh Exports’ ACC Energy, which were selected through a competitive tender process in 2022.

Despite the initial enthusiasm and financial incentives, these companies have struggled to translate commitments into operational capacity. Industry experts attribute this delay to multiple factors. One major challenge is the limited availability of critical raw materials within India. The country depends heavily on imported anode and cathode components, which are essential for battery cell manufacturing. This dependency has been compounded by recent restrictions imposed by China on the export of technology and process expertise related to battery production.

China's control over advanced battery technology has long been a concern for countries seeking to establish independent manufacturing ecosystems. Since China dominates global supply chains for battery components and production know-how, India's efforts to scale up have been hampered by restricted access to vital patents, manufacturing techniques, and materials.

Adding to the complexity, the battery manufacturing sector requires high capital investment and technical skill sets, areas where Indian firms are still developing expertise. The aggressive industrial houses that committed to the PLI scheme now face the challenge of establishing end-to-end manufacturing capabilities, including sourcing raw materials, mastering proprietary processes, and achieving economies of scale.

Aside from lithium-ion batteries, which currently dominate the market, there is growing interest in emerging battery chemistries such as sodium-ion technology. Sodium-ion batteries offer potential advantages including abundant raw materials and lower costs, making them a promising alternative for energy storage and electric mobility. However, these technologies are still in developmental stages and have yet to reach commercial viability on a large scale.

The current scenario underscores the complexity of building a robust battery cell manufacturing sector within India. While the government’s PLI scheme provides a financial framework to encourage domestic production, the ecosystem faces structural challenges that cannot be resolved quickly. Supply chain vulnerabilities, technological dependencies, and the need for skill development remain key obstacles.

India’s cleantech ambitions are closely tied to its ability to produce battery cells domestically. With the global shift toward electric vehicles and renewable energy storage, establishing reliable and scalable battery manufacturing is critical for energy security and industrial growth. The setbacks under the PLI scheme highlight the need for a comprehensive approach that includes investments in raw material sourcing, technology partnerships, and research in alternative chemistries.

Looking ahead, the battery manufacturing industry in India is expected to evolve as government policies adapt and companies deepen their technical capabilities. Collaborations with international technology providers, increased focus on indigenous research, and diversification into emerging battery technologies could gradually improve production capacity. However, reaching the ambitious targets set out in the PLI scheme will require sustained effort over several years.

As the world moves toward decarbonization and electrification, India’s progress in battery cell manufacturing will play a vital role in shaping its clean energy future. While current output remains limited, ongoing initiatives and industry investments could lay the foundation for a more self-reliant and competitive battery sector in the coming decade.