Reliance, Hyundai, Ola among 10 companies to apply for Rs 18,100-crore PLI scheme for cell manufacturing

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A total of 10 companies including Reliance, Hyundai and Ola have applied for the government’s Rs 18,100 crore production-linked incentives (PLI) scheme for advanced chemistry cells (ACC), as per a statement issued by the Press Information Bureau on Saturday.

The companies collectively bid for setting up 130 gigawatt-hour (GWh) of cell manufacturing capacity against 50 GWh of capacity to be awarded as part of the scheme. For perspective, 50 GWh of cell would be sufficient to equip around 125,000 electric scooters a year.

The scheme is expected to give a major boost to localising the electric vehicles (EV) supply chain in India. Despite being a key component for EVs, all such vehicles sold in India presently rely completely on imported cells, mainly from China.

The companies to have applied for the PLI scheme include Lucas-TVS, Mahindra & Mahindra, Amara , , Rajesh Exports, Larsen & Toubro and India Power Corporation Limited. The deadline for sending applications for the scheme expired on Friday.

Notably, the largest global lithium-ion cell makers like Samsung, LG,

as well as leading Chinese players gave the scheme a miss. The companies are focussing on Europe and US as these markets have a higher pricing power and thus better return on investment for manufacturers, an executive at one of these firms told ET on the condition of anonymity.

“The capacity at which these companies think is too large for India. They don’t want to invest in small capacities,” this person said.

What makes investing big money in making cells tricky is that the technology is fast evolving and not stationary. Keeping that under consideration, the government has kept the scheme technology agnostic and the beneficiary firm will be free to choose the technology, raw material and the cells can be catering to any end application.

New Delhi expects the ACC PLI scheme to help reduce crude-oil imports by promoting EVs and also increase the share of renewable energy at the national grid level.

In conjunction with the Rs 25,938-crore PLI scheme for the automotive sector and the Rs 10,000-crore scheme to subsidise EVs, the scheme is part of the government’s push to EV adoption in India and make the country self-reliant in this field. To further deepen localisation, the ACC PLI scheme comes with riders like minimum localisation of 25% within two years before increasing it to 60% in five years.

While manufacturers are upbeat about the scheme, they find these targets lofty.

“When we are looking into the details, the localization conditions appear to be too stringent,” one senior industry executive told ET last month. “Besides, there is a penalty clause applicable every day beyond the timelines set for localization. These are posing some concerns for us.”

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