ACC Battery Storage

With the intent of putting India on the map as a lead battery storage producer, the Department of Heavy Industries (“DHI”) had notified the Production-Linked Incentive, ‘National Program on Advanced Chemistry Cell (ACC) Battery Storage’ (“PLI-ACC Scheme”) in June, 2021.[1] The PLI-ACC Scheme has been developed to boost the Prime Minister’s vision of ‘Atmanirbhar Bharat’ and is one of the thirteen schemes approved by the Union Government.[2] It aims to encourage domestic and foreign investors to invest in setting up giga-scale ACC manufacturing facilities in India.

ACCs are “advanced energy storage technologies that help store electric energy as electrochemical or as chemical energy and convert it back to electric energy as and when required.” As a battery storage system, they are used in various sectors such as electric vehicles, consumer electronics, advanced electric grids, solar rooftops, etc.

The total pay-out envisioned under the scheme is INR 18,100 crore. This will be disbursed over 5 years after the manufacturing facility is commissioned. The Government has also published the Request for Proposal and the draft of the programme agreement and the tripartite agreement (collectively referred to as the “Bid Documents”). The scheme provides that the manufacturing facility will have to be commissioned within a period of 2 years to be eligible for subsidies and the Bid Documents further clarify that a domestic value addition[3] of 60% is required to be attained within a period of 5 years thereafter.

Key features of the PLI-ACC Scheme

PLI-ACC Scheme


Eligibility criteria

Eligibility criteria

Selection process

 The responsibility of monitoring the PLI-ACC Scheme has been given to the empowered group of secretaries (“EGoS”), chaired by the Cabinet Secretary. Duties of the EGoS include ensuring that the expenditure is within the prescribed outlay and making any changes to the scheme, if necessary, subject to the total final outlay remaining within INR 18,100 crore.

The allocation of subsidies to the beneficiary firms will be based on transparent quality and cost-based selection process on the technical and financial bid submitted. This means, the subsidy quoted per Kilo Watt hour of ACC sold and the value addition offered by the bidder would be taken into account during the selection process. Cash subsidy will be disbursed to the beneficiary firm quarterly and will be capped at 20% of the ACC sale price i.e., the effective total turnover on account of ACCs manufactured and sold by the beneficiary firm, excluding applicable GST. The incentive will be disbursed only after the committed domestic value addition and actual sale of the ACCs begin.

Who will benefit?

 According to the ‘International Energy Agency’s India Energy Outlook 2021’, India could have 140 to 200 Giga Watts of battery storage capacity by 2040, attracting a third of the total global investment.[4] Recently, National Thermal Power Corporation (“NTPC”) has called for an Expression of Interest to setup a 1 GWh battery energy storage system at NTPC power plants in India. The government has also announced plans to call bids to setup 4 GWh battery storage system at regional load dispatch.[5]

By keeping the PLI ACC Scheme technology agnostic and phased over a span of seven years, the scheme seeks to improve India’s manufacturing capabilities. Incentives have been provided for batteries with energy density, ranging from 50 Watt hour/ Kg to 350 Watt hour/ Kg, and varying battery life cycles from 1000 to over 10,000. To avail incentives, lower energy densities need to be complemented with higher energy cycles, and vice versa. The cells with better performance characteristics may attract higher subsidies, thereby encouraging manufacturers to invest in research and development and manufacture such cells in India.

In the electric vehicle (“EV”) sector, fiscal incentives under the phased manufacturing programme, which increase the export customs duty for battery packs to 15% from the current 5%, demand incentives under the FAME II policy and supply side incentives through dedicated state electric vehicles policies and the PLI ACC Scheme could enhance localisation to a significant extent and ultimately lead to reduction in cost of electric vehicles in India.


Localisation requirement

 The PLI-ACC Scheme provides that the beneficiary must achieve a domestic value addition of at least 25% and incur the mandatory investment (INR 225 crore /GWh) within 2 years and raise it to 60% domestic value addition within 5 years. The timelines for localisation appear to be too stringent, taking the lack of requisite manufacturing infrastructure and export base in the country into consideration. A penalty is attracted for every day beyond the timelines set for such localisation.

Single window clearance

 While the scheme envisages single window clearance mechanism for all potential investors, the Bid Documents stipulate that the final obligation with regard to obtaining clearances vests on the beneficiary company. This would require the bidder to negotiate and liaison with many agencies of different state governments, who have varying degrees of business efficacy. Though the state governments do have a best effort basis obligation to procure the clearances, it defeats the promise of a turnkey single window clearance in the PLI-ACC Scheme.


 It is pertinent to note that the incentives under the PLI-ACC Scheme will be disbursed only after the committed domestic value addition and actual sale of the ACCs commences.[6] The Bid Documents provide for a quarterly disbursement of subsidy for the beneficiary company, along with the requirement of certification from an independent engineer. The extent of the subsidy will differ, pursuant to such approval from the engineer, thereby affecting the practical implementation and timelines of such disbursement. Moreover, the limit on the subsidies, as stipulated above, will also have to be factored in while disbursing the subsidies.

Minimum holding requirement

 The Bid Documents stipulate a minimum holding requirement of 26% for a period of 5 years in the beneficiary company. Additionally, in the spirit of making it a “Make in India” move, any non-resident investing more than 25% in the beneficiary company will require prior approval of the government. As per the GFR Order[7], any bidder from a country, which shares land border with India will be eligible to bid only if the bidder is registered with the competent authority, as specified in the GFR Order.

 Is India late in the race?

Countries like the US, Australia, and China, among others, already have initiatives similar to the Indian PLI-ACC Scheme in place since early 2012.[8] This brings into light the possibility of India being a late entrant into the global market. However, other countries do not have a huge lead at present, which means that India can still strive and succeed in the global market, leveraging on its strong chemical industry and abundant reserves of key natural resources.


 The Centre’s vision of transforming India into a competitive and self-sufficient EV and battery manufacturer may soon become a reality through the FAME II policy, State EV policies and now, the PLI ACC Scheme. The practical difficulties in the implementation of the PLI-ACC Scheme and the incentives provided thereunder can only be analysed with time. Therefore, it is essential that a well-rounded implementation strategy is utilised to provide an impetus to the objectives of the PLI-ACC Scheme.

In conclusion, the PLI ACC Scheme will not only anchor the EV mobility ecosystem in India and promote sustainable development in the country, but also provide manufacturers an opportune moment as demand for advanced battery storage technologies increases worldwide.

* The authors were assisted by  Associate, Winy Daigavane



[3] Value addition, as defined under the PLI-ACC Scheme, is the percentage of manufacturing of ACC that is undertaken in India, either by the beneficiary firm on its own, through ancillary units or domestic manufacturers. The value addition should be achieved as a result of a change in a HSN (Harmonised System Nomenclature) at the six-digit level on account of the manufacturing undertaken on the goods procured for the manufacturing activity. Considering the focus on improving localisation, detailed rules on calculation of value addition have been provided. To support and validate claims of value addition, the manufacturers will have to submit a statutory auditor’s certificate.




[7] Ministry of Finance, Government of India has issued order dated 23 July 2020 for qualification of a bidder from a country which shares a land border with India.