India's Advanced Chemistry Cell Production Linked Incentive scheme, which provides manufacturing incentives of approximately 18,000 crore rupees over five years for domestic battery cell production capacity in India, has reached the milestone phase where PLI beneficiaries are commencing commercial production and the scheme's ability to deliver its objective of building domestic battery manufacturing capacity competitive with Chinese and South Korean established producers is being tested against the operational realities of greenfield cell manufacturing at scale. The ACC PLI scheme was designed to stimulate investment in the full cell manufacturing value chain including cathode active material, anode, separator, and electrolyte production alongside cell assembly, recognising that import-dependent cell assembly provides limited domestic value creation and limited strategic supply security compared with integrated cell manufacturing with domestic materials sourcing. The commercial milestones being reported by PLI beneficiaries including Ola Electric, Rajesh Exports, and Reliance New Energy are significant not just for the individual companies but as indicators of whether India's industrial policy approach to battery manufacturing can generate the scale and competitiveness required to serve the growing domestic electric vehicle market and position India as a battery export competitor over the medium term.
PLI Scheme Architecture and Incentive Mechanics
The ACC PLI scheme offers incentives calculated as a percentage of net incremental sales value from new battery cell manufacturing capacity, with higher incentive rates available for cells meeting specified domestic value-addition thresholds that require integration of domestically produced cathode active material, anode material, separator, or electrolyte rather than fully importing these components. The incentive structure is designed to reward the deeper domestic manufacturing integration that the scheme's supply chain development objective requires, creating economic incentive for PLI beneficiaries to invest in upstream materials manufacturing alongside cell assembly rather than optimising for the minimum domestic content required to qualify for base incentive rates. The PLI scheme's requirement that beneficiary investments are subject to production verification and domestic content certification by a government-designated agency introduces a compliance monitoring mechanism that is intended to prevent PLI-label battery manufacturing that is primarily cell assembly from imported components with minimal domestic value creation.
The government's willingness to modify PLI scheme parameters in response to implementation experience, including adjustments to domestic content requirements, production timelines, and eligible technology specifications that have been made since the scheme's original announcement in 2021, reflects a pragmatic industrial policy approach that prioritises investment mobilisation and production scale-up over strict adherence to original scheme architecture when implementation challenges arise. The timeline extensions granted to several PLI beneficiaries whose greenfield cell manufacturing construction programmes encountered supply chain delays, permitting challenges, and equipment procurement lead times that the original scheme timeline did not adequately account for demonstrate the government's commitment to working with PLI beneficiaries to achieve the scheme's objectives rather than imposing penalties that would undermine investment momentum. The ACC PLI scheme is therefore better understood as a dynamic public-private partnership in battery manufacturing development than as a fixed incentive framework with rigid compliance gates.
Ola Electric's Gigafactory and Cell Manufacturing Progress
Ola Electric has emerged as the most commercially prominent ACC PLI beneficiary, combining its position as India's largest electric two-wheeler manufacturer with an ambitious programme to integrate domestic cell manufacturing into its supply chain through the Ola Gigafactory in Tamil Nadu. The Gigafactory's Phase 1 cell manufacturing capacity, targeting lithium iron phosphate cell production for Ola's electric scooter battery packs, represents a genuinely integrated manufacturing development that includes cell chemistry development, electrode coating, cell assembly, and formation cycling rather than merely packaging imported electrode materials into cells. Ola Electric's decision to focus on LFP chemistry, which offers lower energy density than nickel-manganese-cobalt chemistry but superior thermal stability, cycle life, and cost per kilowatt-hour at the cell level, aligns with the two-wheeler application requirements where battery pack volume and weight constraints are less severe than in four-wheeler applications, and positions Ola in a battery chemistry segment where the Chinese technology lead is narrower than in NMC chemistry given LFP's simpler chemistry and manufacturing process.
The commercial challenge for Ola Electric's integrated manufacturing strategy is the gap between the production cost of its early-stage Gigafactory cells and the cost of equivalent cells from established Chinese manufacturers at scale, which reflects the learning curve and volume scale difference between a new greenfield manufacturing programme and Chinese producers who have been manufacturing at gigawatt-hour scale for more than a decade. Ola Electric's ability to close this cost gap through production scale-up, process optimisation, domestic materials sourcing development, and the eventual benefit of PLI incentives that reduce the net production cost is the commercial test that the company's integrated manufacturing thesis depends on. The EV demand growth in India's two-wheeler market provides the volume trajectory that the learning curve cost reduction requires, and Ola's dominant position in the premium electric two-wheeler segment provides demand visibility that justifies manufacturing capacity investment ahead of immediate cost competitiveness with established Chinese producers.
Rajesh Exports and Diversification into Battery Manufacturing
Rajesh Exports, historically India's largest gold jewellery exporter and processor, has applied its PLI allocation to battery cell manufacturing through its subsidiary Lexnover Energy, representing the kind of diversification investment by established industrial conglomerates that the PLI scheme was designed to attract by providing sufficient financial incentive to justify greenfield entry into a capital-intensive and technically complex manufacturing sector. The Rajesh Exports PLI allocation for battery manufacturing in Karnataka is at an earlier commercial stage than Ola Electric's programme, but its commitment represents the breadth of industrial investor interest in India's battery manufacturing opportunity that the PLI scheme has stimulated beyond dedicated EV companies. The commercial credibility of Rajesh Exports' battery manufacturing diversification will be tested as its programme progresses from construction and equipment commissioning into commercial production, where the operational expertise and cell chemistry development capability required for competitive cell manufacturing will be a more significant differentiator than the capital and project management capabilities in which Rajesh Exports has established track records.
Materials Supply Chain Development and Import Dependence Challenges
The critical materials supply chain for battery cell manufacturing in India, encompassing lithium, cobalt, nickel, and manganese for cathode active materials, natural and synthetic graphite for anodes, and the specialty chemicals for separator and electrolyte production, is currently dominated by imports with limited domestic production at any point in the upstream materials value chain. India's lithium resource endowment is limited relative to its battery manufacturing ambitions, and the government's efforts to secure lithium supply through strategic mineral agreements with lithium-rich countries in Latin America and Australia and through the Indian Strategic Petroleum Reserves and Khanij Bidesh India Limited overseas mineral acquisition programme reflect the gap between India's battery manufacturing aspirations and its domestic critical mineral resource base. The domestic mining development potential in India is better for some materials including graphite in Orissa, manganese in Odisha, and potentially lithium at the Reasi deposit in Jammu and Kashmir discovered in 2023, but bringing these deposits to production-scale supply on a timeline relevant to PLI scheme beneficiary manufacturing scale-up requires acceleration of exploration, permitting, and mining development programmes that are not currently progressing at the pace the battery manufacturing timeline requires.
The cathode active material production development in India, which represents the highest value-added upstream step in the battery materials value chain and which the PLI scheme's domestic content incentives are specifically designed to stimulate, is being pursued by companies including Epsilon Advanced Materials and Faradion with technical partnerships from established cathode material suppliers in Japan and South Korea who bring process technology knowledge that domestic Indian companies would take years to develop independently. The establishment of domestic cathode active material production capability is the most commercially significant materials supply chain milestone for India's battery manufacturing ambitions because it determines whether PLI scheme cell manufacturing develops into integrated manufacturing with domestic materials value creation or remains heavily dependent on imported materials with limited domestic supply chain depth.
Top 10 Companies in India Battery Manufacturing and ACC PLI Scheme
- Ola Electric -- India's largest electric two-wheeler manufacturer with ACC PLI allocation and Tamil Nadu Gigafactory integrating LFP cell manufacturing, electrode production, and battery pack assembly into domestic cell-to-vehicle manufacturing programme.
- Reliance New Energy -- Reliance Industries clean energy subsidiary with ACC PLI allocation and substantial capital commitment to battery cell manufacturing as part of integrated solar, battery, and green hydrogen clean energy industrial platform.
- Rajesh Exports (Lexnover Energy) -- India's largest gold exporter diversifying into battery manufacturing through Lexnover Energy subsidiary with ACC PLI allocation for lithium cell production capacity in Karnataka.
- Epsilon Advanced Materials -- Indian cathode active material and graphite anode developer supplying battery cell manufacturers and targeting domestic supply chain development for the upstream materials that PLI scheme beneficiaries currently import.
- Amara Raja Energy and Mobility -- Established Indian lead-acid battery manufacturer transitioning to lithium-ion cell manufacturing with ACC PLI participation and GigaCell facility development targeting EV and energy storage battery market segments.
- Exide Industries -- Legacy Indian battery manufacturer developing lithium-ion cell production capabilities alongside established lead-acid battery business, with ACC PLI participation and technology partnerships for domestic cell manufacturing scale-up.
- Khanij Bidesh India (KABIL) -- Government joint venture pursuing overseas critical mineral acquisitions in lithium, cobalt, and nickel to secure upstream material supply for India's battery manufacturing ambitions under the government's strategic mineral supply programme.
- Tata Chemicals -- Tata Group chemicals company developing lithium-ion battery materials including LFP cathode active material production capability to supply Tata Motors' EV battery requirements and broader Indian battery manufacturing sector.
- Log9 Materials -- Indian battery technology company with proprietary graphene-enhanced battery technology, targeting commercial cell manufacturing with Indian-developed chemistry for two-wheeler and commercial vehicle EV applications.
- Indian Oil Corporation -- State oil company diversifying into battery technology and manufacturing with government mandate, pursuing cell manufacturing development as part of India's energy transition and strategic battery supply security objectives.
Our Take
India's ACC PLI scheme is producing the investment commitments it was designed to stimulate, and the transition to commercial production that PLI beneficiaries are navigating now is the genuinely difficult phase where industrial policy objectives meet manufacturing execution realities. The key commercial question is not whether India will develop battery manufacturing capacity but whether that capacity will be competitive enough to serve domestic EV demand without tariff protection and to eventually compete in export markets, and the answer depends heavily on how quickly PLI beneficiaries progress down the learning curve and how effectively they develop domestic materials supply chains that reduce import dependence. Ola Electric's integrated manufacturing approach is the most commercially interesting experiment in the Indian battery space because it is attempting a genuinely ambitious vertical integration strategy in a capital-intensive technology sector where the established Chinese producers have decades of learning curve advantage. The cathode active material development gap is the most commercially significant constraint on Indian battery manufacturing competitiveness and deserves more investor and policy attention relative to the cell assembly progress that dominates the PLI scheme coverage. If India can establish competitive domestic cathode active material production in the next five years, the entire PLI scheme investment thesis strengthens significantly; if that supply chain development stalls, Indian battery manufacturing will remain assembly-intensive with limited domestic value creation regardless of the cell production volumes achieved. -- Marcus Reid, MarketsNXT