The PLI scheme requires firms to commit to build a unit of at least 5GWh capacity.(Bloomberg)
The PLI scheme requires firms to commit to build a unit of at least 5GWh capacity.(Bloomberg)

Govt may ease battery PLI rules as companies raise concerns

  • This follows concerns raised by battery makers such as Tata Chemicals Ltd and Amara Raja Batteries Ltd on the eligibility criterion, as well as penalties and high localization norms to claim benefits under the scheme, said three people directly aware of the developments.
By Malayaban Ghosh, Utpal Bhaskar, Hindustan Times, New Delhi
PUBLISHED ON MAY 29, 2021 07:46 AM IST

India may relax some of the conditions set in the 18,100 crore production linked incentive (PLI) scheme to attract investments from a host of companies in the energy and power sector.

This follows concerns raised by battery makers such as Tata Chemicals Ltd and Amara Raja Batteries Ltd on the eligibility criterion, as well as penalties and high localization norms to claim benefits under the scheme, said three people directly aware of the developments.

During talks with officials at NITI Aayog and the ministry of heavy industries and public enterprises, the companies aired apprehensions about the penalty clause and the minimum bid size of 5 gigawatts per hour (GWh) set in the eligibility criterion that they believe may become an impediment considering the current financial and demand situation, the people mentioned above said, seeking anonymity.

The PLI scheme requires companies to commit to build a manufacturing unit of at least 5GWh capacity and ensure minimum domestic value addition of 60% within five years at the ‘project’ level. Subsequently, the battery or cell maker will have to achieve a domestic value addition of 25% and show a minimum investment of 225 crore per GWh within two years, raising it to 60% domestic value addition within five years “either at the mother unit, in case of an integrated unit, or at the project level, in case of hub and spoke” structure.

Through this scheme, the Union government is looking to tap direct investments of about 45,000 crore from local and overseas firms over the next decade. It also expects to save up to 2.5 trillion through lower crude oil imports during the period of this programme due to the increased adoption of electric vehicles.

One of the three people cited above said officials at NITI Aayog and the ministry of heavy industries and public enterprises are working on relaxing some of the eligibility and other criteria after meeting almost all the Indian companies interested in the scheme.

“The announcements could be made in the coming weeks. Most companies have engaged with the government, and the officials also understood that certain changes are needed in the scheme to encourage the companies,” the person said.

Emailed queries to NITI Aayog, the ministry of heavy industries and public enterprises, Tata Chemicals and Amara Raja Batteries on Tuesday remained unanswered.

Global firms such as Panasonic Corp, LG Chem Ltd and CATL Ltd are still to make any announcements on starting lithium-ion cell manufacturing in India. Indian firms such as Tata Chemicals, Amara Raja Batteries and Exide Ltd have meanwhile announced plans to make lithium-ion cells and batteries in the coming decade.

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