Indias Production-Linked Incentive programme for Advanced Chemistry Cell batteries was supposed to be a deal. The goal of the Production-Linked Incentive programme for Advanced Chemistry Cell batteries was to get companies in India to make batteries. This would help India make electric vehicles.. So far the Production-Linked Incentive programme, for Advanced Chemistry Cell batteries has not done much. It has only delivered a part of what it promised to do for Advanced Chemistry Cell batteries and electric vehicles. The scheme is supposed to do a few things like make a lot of cells around 50 GWh and create jobs and invest a lot of money.. It is not working out because of some real problems. There are issues with the technology. Getting the things we need. The rules and timelines are also not very good.. To be honest we are not really sure if people will want to buy this stuff so that makes it hard to plan. The companies that make the cars are also doing their thing. To make it work we need to make some changes to the rules and make sure everyone is, on the page. We also need to get the things we need like materials and technology from people.

Below is what the scheme was supposed to do. Then we will look at what has gone wrong with the scheme. We will use numbers to show this. The scheme is important for Indias Electric Vehicle plans. So we need to understand why the scheme is not working. Finally we will talk about what the government and businesses can do to fix the problems, with the Electric Vehicle scheme and get it working again.

1) The scheme: this is what the scheme was about and the scheme is really important because of what the scheme was trying to do and the scheme had a big impact, on a lot of things.

In May 2021 the Government of India approved the National Programme on Advanced Chemistry Cell Battery Storage. This is a plan to help companies make Advanced Chemistry Cell Battery Storage in India. The main goal of the National Programme on Advanced Chemistry Cell Battery Storage is to make lots of Advanced Chemistry Cell Battery Storage in India. The Government of India wants to make sure that India can make its Advanced Chemistry Cell Battery Storage instead of buying them from other countries. The main points of the National Programme, on Advanced Chemistry Cell Battery Storage were easy to understand:

A financial outlay (around ₹18,100–₹20,000 crore in different statements) to incentivise manufacturers to set up Giga-scale ACC production (total target ≈ 50 GWh capacity).

The plan was to make battery production happen in India. This would reduce the need for India to buy batteries from countries, especially China. The goal was to get foreign companies to invest in India create jobs for people and make batteries cheaper for vehicles and for storing energy. This would help India with its battery needs. The main idea was to make India less dependent on countries for batteries like the ones from China and make batteries, for electric vehicles and storage cheaper.

This is important because batteries are the expensive part of electric vehicles and a key thing for storing energy on the grid. So making battery cells in our country is a big deal for our industry and for keeping our energy safe. It also helps create jobs and supports the growth of people buying electric vehicles. Batteries are a part of this and domestic cell production is necessary, for energy security and the growth of electric vehicles.

2) How far off track is the programme? (the headline figures)

The gap between expectations and delivery has been stark:

The scheme’s target: 50 GWh of ACC capacity (by/around 2025-26).

Far the amount of commissioned work is very small. Many people have looked at this. They all say that we have only managed to commission about 1.4 GWh of capacity. This is around 2 to 3 percent of what we are trying to do. The main reason we have even got this far is because one company has managed to get one of their plants up and running. The amount of money being invested and the number of jobs being created are also very small compared to what we want to achieve. Commissioned capacity is still not where it needs to be.

Some people who do research on their own and others who look at policies have pointed out that only a small part of what was promised is actually working. The people who are supposed to benefit from this are asking to be let off from paying penalties. They are changing their plans to make them less ambitious. These researchers and policy analysts are talking about the announced capacity of the project and how it is not living up to what was expected. The beneficiaries are having a time and that is why they are requesting relief from penalties or revising their ramp-up plans downwards, for the announced capacity.

These problems are not just that things are happening late. They show that there are issues, with the system, which is what I will talk about next.

3) What is really wrong with the battery scheme? The main problems, with the battery scheme are the issues that need to be fixed. The battery scheme has some problems that people should know about. The battery scheme is not working well because of these core problems.

I will split these into supply side issues demand side issues and policy or implementation issues.

A. Supply-side headwinds

1. Technology and IP concentration

Good battery technology is mostly controlled by a few companies in East Asia. These companies have good materials for the parts of the batteries and they know how to make them. They have been making batteries for a time and have learned how to do it very well. This means that people who want to make batteries have a hard time getting the knowledge and equipment they need. They try to get it by working with these companies or by hiring people who already know how to make batteries.. This is harder and more expensive than they thought it would be. So projects that were counting on being able to make batteries and easily are finding out that it is taking longer and costing more money than they expected. Battery technology is really important. These big companies have a lot of experience with battery technology. Getting access to this knowledge and equipment is crucial, for anyone who wants to make batteries. It is not easy.

2. Critical raw material constraints

Battery production needs minerals such as lithium, cobalt, nickel, graphite and precursor chemicals.

India has started to look for these resources and recycle them. The global supply chain for battery production is still not balanced.

Most of the mining and refining and chemical processing for battery production are done in countries.

This makes battery production more expensive. Indian battery producers have to deal with the risk of not getting the materials they need because of import issues and competition with other countries for these materials, such, as lithium, cobalt, nickel, graphite and precursor chemicals.

3. Equipment and installation bottlenecks (and skilled labour)

Setting up cell lines like the giga-scale cell lines needs special machines and people who know what they are doing like experienced engineers and technicians.

When the machines do not arrive on time it causes problems.

It is also hard to find the right people to install the machines. Sometimes these people have to come from other countries.

The giga-scale cell lines are affected by delays, in equipment delivery. It is difficult to get the specialist installers or technicians.

The people who are coming from abroad to help with the giga-scale cell lines they have to get visas. This can take a long time.

One report says that the visa delays for the technical specialists who are working on the giga-scale cell lines have been a big problem.

4. The local component ecosystem is really not that mature yet. It has a lot of growing up to do. Local component ecosystem needs to develop more. This is a problem, for the local component ecosystem.

To make batteries we need to make cells.. To have a battery industry that can compete with others we need to have local companies that can supply us with the things we need to make batteries. This includes the materials, for the electrodes the separators, the electrolytes, the people who design the packs and the systems that manage the batteries. The problem is that many of these suppliers are still very new and do not have a lot of experience. This means that the people who make batteries have to buy some of the things they need from countries, which makes everything more expensive and makes it harder to meet our goals for making batteries locally. We need these local suppliers to be able to make the things that battery manufacturers need like electrode materials, separators, electrolytes and battery management systems so that we can have a battery industry.

B. Demand-side and market dynamics

1. EV demand uncertainty and OEM strategies

Battery makers need to know that car and two-wheeler manufacturers well as fleet operators will buy a lot of batteries for a long time. This is so they can justify spending an amount of money on big factories. Electric Vehicle sales in India are going up.. The way people are buying Electric Vehicles is a little strange. For example people are buying a lot of two-wheeler and three-wheeler Electric Vehicles. Not as many cars. Also people in India are very sensitive about the price of Electric Vehicles. This makes it hard to predict how many batteries will be sold. Some car and two-wheeler manufacturers are being careful, about signing contracts to buy a lot of batteries for many years. This means that the companies that make the batteries do not have an idea of how many batteries they will sell. Battery makers are affected by this because they need to know how batteries they will sell to make big investments in their factories.

2. Strategic revisioning by awardees

Some of the awardees have lowered their goals. Put things on hold. For example one big company that got a lot of money had plans to do a lot but now they are saying they will start with something much smaller and wait longer to do the rest. When a few big companies slow down it hurts the system because the companies that are part of the system are all connected. The awardees slowing down is a problem, for the ecosystem.

3. Competition from established low-cost producers

Chinese cell manufacturers have a lot of benefits. They can make cells at a cost because they make so many of them. They also have a lot of suppliers in China and their manufacturing processes are very good. This means they can sell cells at a price.

If Indian cell makers want to compete with them they need to find a way to make cells at a cost or offer something else that is good like making sure people in India can get the cells they need. If they do not do this companies that make things like phones and computers might just buy cells from countries. This would be bad for cell makers, in India because people would not be buying their cells.

C. Policy and implementation design frictions

1. Aggressive timelines and performance penalties

The PLI programme has short deadlines for getting things done and it has penalties for being late. This was meant to keep everyone on track. It does not really think about the things that can slow us down in the real world like how long it takes to get equipment or to get the right permits. So the people who are getting help from the PLI programme are asking for a bit time. At the time being too strict, about the deadlines could hurt projects that can still get done if we just adjust the schedule a bit. The PLI programme needs to think about this because we want to make sure that the projects that are getting help from the PLI programme can still succeed.

2. The Domestic Value Addition rules are really hard to follow from the start the Domestic Value Addition rules can be very tough to figure out at first.

The plan for adding value in our country is very important for industries to grow in the long term. However the rules are difficult to follow at the beginning because we do not have domestic suppliers for the things we need. This is a problem. Companies need suppliers from our country to add value but these suppliers need people to buy from them so they can get bigger. This problem is causing delays in getting projects approved and started. The scheme, for adding value in our country is still a good idea but it is hard to make it work when we do not have many domestic suppliers.

3. Regulatory and administrative bottlenecks

Getting land and power is a task. It also takes a lot of time to get clearances and approvals from the state. This is a problem because the industry we are talking about needs a lot of money to operate and the profits are not very high. There are also risks with the technology we use. When things get delayed it really affects the projects finances. Some reports have said that the state needs to work on its infrastructure and logistics these are areas that need improvement. The environmental clearances and state-level approvals for projects, like these can be very time-consuming.

4. Financing and investment expectations

The Production Linked Incentive provides production linked incentives it does not give capital subsidies. The developers of the Production Linked Incentive still need to have a lot of money upfront.

Global investors look at what they can get from the Production Linked Incentive. Compare it to the risks.

The Production Linked Incentive has risks, like technology, demand, policy continuity and cost competitiveness.

Because of these uncertainties and the perceived risk of the Production Linked Incentive some people do not want to invest in the Production Linked Incentive or it costs more for them to get money.

4) Why the shortfall matters it is not, about the big numbers we see in the news the shortfall matters for many other reasons too the shortfall matters because it affects the actual things that the numbers represent like people and their lives the shortfall matters.

The cost of vehicles is really high and people are not buying them as fast as we thought. This is because India does not make batteries on its own. We have to get the batteries from countries. When we import batteries the price of vehicles goes up. This makes it hard for many people to buy them. It also makes it difficult for companies to get the batteries they need to make a lot of vehicles. This is a problem for India if we want a lot of people to start using electric vehicles, like the electric vehicles.

The plan to create jobs and help industry did not work out. It was supposed to give people jobs and also create other jobs in related areas.. It did not do that. This means we missed out on chances to grow our industries. The scheme promised a lot of jobs. It failed to deliver so now we have lost opportunities, for industrialisation. The industrial and job targets were not met.

India has a problem. The country relies much on external supply chains. This means India is in a spot when it comes to dealing with geopolitical tensions and export controls. When things get really bad Indias reliance on countries for supplies can be a major weakness. This is what we call a vulnerability for India. Indias supply chains are not totally in its control so the country is at risk when other countries have problems or decide to limit what they export. This can be very bad for India, in times of stress.

When big plans are announced but they do not deliver what they promise it hurts the credibility of the policy. This makes investors lose trust. It becomes really tough to get support, for future policies related to industry. The policy credibility is wasted because people do not believe in it anymore. Big announced plans that underdeliver really reduce investor confidence and make it harder to get people to follow industrial policies.

5) So what does the evidence actually tell us to do? What are some real and practical things we can do to fix the problems and what changes should we make to our policies to make things better?

The weaknesses we have talked about need an multi-step solution. We need to make the programme more realistic and effective and at the time we need to deal with the structural problems. Here are some specific and useful steps that the policy makers and the industry can take.

A. Immediate/near-term adjustments to the PLI programme

1. Recalibrate timelines and performance metrics

We should get rid of the two-year rules for commissioning and instead use staged and realistic milestones that take into account the time it takes to deliver equipment, transfer technology and learn how to use it. We need to make sure people are still held accountable. The penalties should be fair and flexible like having the option to extend the deadline if there is a good reason. This way we can reduce the problems that come up without compromising the results. Many people who benefit from this have asked for flexibility so the people making the rules should find a balance, between being strict and being practical.

2. Graduated Domestic Value Addition (DVA)

We should allow companies to start with DVA thresholds at first and then these DVA thresholds should get higher over time. This way projects can begin away using imported materials and at the same time local suppliers can grow and get ready. The main goal of localisation is still important in the run. We should link the increase in DVA thresholds to plans, for developing local suppliers and keep a close eye on their progress. This means DVA increases should be tied to supplier development roadmaps and we need to monitor them closely.

3. Facilitate technology partnerships

Actively support joint ventures and licensing partnerships with established cell technology leaders through facilitation (faster approvals for strategic JVs), incentives for tech transfer, and matching support for R&D. Where necessary, facilitate neutral third-party testbeds and pilot lines to de-risk entry.

4. Targeted support for upstream inputs

Offer targeted incentives (tax breaks, capex support, concessional finance) for domestic manufacturers of electrode materials, precursors, separators and electrolytes. Building this supplier base is essential to achieve true domesticisation.

B. Strengthen demand signals and OEM linkages

1. Anchor purchasers and long-term purchase contracts

The government can really help increase the demand for things. For example they can buy battery packs for the buses that people use to get or those little three-wheeled vehicles that municipalities use to get things done or they can put out requests for energy storage systems that are made in our own country. When the government does this it gives the people who make these things a guarantee that they will be able to sell what they produce which makes it easier for them to get the money they need to make more of these battery packs and energy storage systems and three-wheeled vehicles. The government is, like an anchor that helps these manufacturers by giving them a customer, which is the government itself so the government is really helping the manufacturers of battery packs and energy storage systems and three-wheeled vehicles.

2. Coordinate industrial policy for EVs and batteries

We need to make sure that FAME, which is a plan to get people to buy vehicles and the vehicle PLI schemes and the ACC-PLI all work together.

This will help the companies that make the cells, for these vehicles.

For example we can give preference to vehicles that use cells made in our country as long as it is affordable.

If we do this it will help fix the problem of the market not matching up with what people need.

The main goal is to support the people who make the cells and help FAME work better.

C. Raw materials strategy and circularity

1. Critical minerals policy

We need to come up with a good plan for critical minerals. This plan should include finding out what minerals we have in our own country encouraging people to look for more and building facilities to process these minerals. We should also make deals with different partners to get the things we need like lithium from them. This way we will not have to rely on one place, for these important minerals, which is a big risk. Critical minerals are very important so we need to make sure we have a supply of critical minerals.

2. Recycling and second-life markets

We should invest in battery recycling infrastructure. Make sure we have good regulations in place. This way battery recycling can be a business. When we recycle batteries we get back important materials like lithium and cobalt and nickel. These materials are very useful. Can really help reduce how much we need to import from other places over time. This will also help us have a supply chain for batteries, which is a great thing, for battery recycling. Battery recycling is very important. We should support it by investing in battery recycling infrastructure and regulations that help battery recycling.

D. Financing, risk mitigation and capacity building

1. De-risking instruments

We should offer deals on loans guarantees that cover part of the credit and mixed finance options for the first projects. It would be an idea to have a special fund for big projects in specific industries that provides money for a long time and at lower interest rates for really big projects, like giga projects.

2. Skill development and cluster creation

We need to support training programs that teach people how to make cells and assemble battery packs. We also need to make sure these programs focus on quality assurance.

It would be an idea to create special areas where companies can easily set up and start working right away. These areas should have everything they need like power and logistics and even labs to test things.

This will help companies get started faster and save money. The cell manufacturing and battery pack assembly are very important. We should support them.

E. Regulatory and administrative reforms

1. Fast-track clearances for strategic projects

We need to make it easy for companies to invest in batteries by creating a process that lets them get all the necessary approvals in one place. Each state should have a team that helps these companies and tries to attract them by offering electricity prices and help with finding a location. At the time we have to make sure that battery companies do not harm the environment. The states should try to outdo each other to provide the conditions, for battery investments, including predictable electricity pricing and land support while also making sure that battery companies follow environmental rules. This will help bring in battery investments.

2. Standards and certification

We need to make the development and harmonisation of safety and quality standards for cells and packs go faster. This will help us have testing and certification pathways for cells and packs. When we have standards for cells and packs it makes people feel more certain about the technology. This certainty reduces the risk that comes with technology and it encourages the original equipment manufacturers or OEMs to buy cells and packs from local companies. This is good, for cells and packs because it helps them grow and get better.

6) What is currently happening in the industry and where things are heading with the industry the industry is taking some steps. The signs are pointing in a certain direction, with the industry.

Some of the awardees have started working on lines and they are putting off the bigger phases for now. The companies are asking for time and flexibility. In a lot of cases the government has been asked to think about being more lenient with the penalties and the timelines for the awardees. The awardees need the government to be understanding about the deadlines and the penalties, for the awardees.

People who study these things think that even though it is taking a time to get things started there are still a lot of projects being built in India. This means India still has a chance to get better at building capacity for battery energy storage if the government makes it easier to do business and the industry grows. Some other people have written reports that say we can expect to see a jump, in the number of battery energy storage installations in 2026 when some of the projects that have been planned are finished. However most of the capacity that the Production Linked Incentive scheme is supposed to create has not been built yet. India and battery energy storage still have a way to go.

7) Risk trade-offs and political economy

Policymakers have to make some decisions. They are dealing with Policymakers issues that’re really difficult. Policymakers have to weigh their options when they are making these decisions, about Policymakers problems.

Protecting the industry is a big deal. We want to help the companies in our country.. We also want to keep prices low for people who buy things. If we put taxes on things, from other countries or limit what comes in it can help our local companies.. It can also make cars cost more and make it harder for people to switch to electric vehicles.

So what is the best way to do this? It is better to have a plan that includes some rules and also some goals that companies have to meet. This way we can protect the industry and also make sure people can afford the things they need. Protecting the industry is very important and we have to think carefully about how to do it.

Being tough versus having faith in the industry: when we have rules it shows we are serious but if we are too harsh when there are problems that are not really the industrys fault it can make investors nervous. So what can we do? We can set goals that we have to meet and also have a way to give the industry a break when thingsre really out of their control. This way the industry knows what to expect and can plan for it. We need to find a balance, with rules and being understanding when the industry is facing problems that are not their fault.

When we talk about speed versus quality and safety we have to think about what happens when we rush to get a plant up and running. If we do not give people the training they need and we do not follow the rules it can be very dangerous. This is especially true for batteries because they can overheat or even catch on fire. We have to make sure we are doing things the way so we do not put people in harms way. Speed is not more important than safety. We should never forget that. Batteries can be dangerous if we are not careful things, like runaway and fires can happen. We have to be careful and make sure we are following the rules so everyone stays safe. Maintaining standards is something we must always do it is not something we can compromise on especially when it comes to batteries and safety.

8) Case studies and comparative lessons

China did a lot of things to make its battery industry strong. The country started by giving money to people who bought vehicles, which helped get things going. China also helped the companies that make the parts for these batteries. They built areas where all these companies could work together which made things easier. Because many people in China wanted to buy electric vehicles the companies that made the batteries could make a lot of them which helped lower the cost.

China was also lucky because it could control the process from taking the ingredients out of the ground to making the batteries. The country already had a lot of companies that made electronics and chemicals which’re important for batteries. If another country wants to do what China did it will take a time and a lot of effort. The government will have to make policies and make sure they all work together and people will have to keep wanting to buy electric vehicles. Chinas battery industry is an example of what can happen when a country has a plan and sticks to it. Chinas model is not easy to replicate. It is possible with time and hard work. China is still a leader, in the battery industry and other countries can learn from Chinas experience.

South. Japan: This is a place where big companies do well because they work together with other companies and have a lot of protection. The main thing we learn from this is that you need to have technology and make high quality products. Just giving people money is not enough you also need to work with companies that make technology and help the people who supply you with things.

The situation in India is unique. India has its set of challenges like people being very sensitive about prices. In India people mostly buy two-wheelers and three-wheelers. So the policies, for India should be made keeping these things in mind than just copying from somewhere else. India needs its special set of rules.

9) A plan that we can follow step by step like a list of things to do one after the other this is what we need for a practical roadmap. We are talking about a roadmap that’s easy to understand and use. This roadmap is, like a checklist that helps us get things done.

Here is what people can do about this problem. They can take a three step approach that works. Policymakers and industry people can do these things:

Stage 1 — Stabilise (next 6–12 months)

We need to take another look at the deadlines for commissioning and make them longer if that is what is needed. The commissioning timelines should be extended when it is justified. We have to be clear and fair about how we make these decisions. The criteria we use to decide should be transparent and objective. This means the criteria, for extending the commissioning timelines should be easy to understand and based on facts.

Introduce flexible DVA ramp schedules.

Identify a set of anchor procurements (public fleets, state tenders) to provide immediate offtake.

Stage 2 — Catalyse supply chain (12–36 months)

We need to start programs to help the companies that give us the things we need to make our products. These are the companies that supply us with materials and parts. We have to launch targeted incentives, for these materials and component suppliers. This will help them. Also help us in the long run.

Facilitate JV negotiations and fast-track approvals for technology partners.

Set up a national battery testing and R&D pilot facility to accelerate tech transfer and standards.

Stage 3 — Scale and secure (3–6 years)

We need to make a plan, for minerals. This plan should include building places where we can recycle. We also need to increase the amount of Domestic Value Added or DVA that we require.. We should do this slowly as our domestic suppliers get better and can handle it. The critical minerals strategy is very important. It will help our domestic suppliers of critical minerals to grow.

Monitor industry health and adjust tariff/tax levers temporarily as needed to nurture competitiveness without permanent protectionism.

The India government made a plan with the ACC-PLI programme. They want to make batteries in India because that’s very important for electric vehicles.. Just wanting to do something is not enough. The programme is not doing well far because it is really hard to build a big industry like this in a short time. It needs a lot of money and advanced technology. The good thing is that we can fix many of the problems if we make some changes to the plan and work together better. The government and companies need to talk and work together. We also need to help the people who supply the materials and make sure we have enough of what we need to make the batteries.. We need to make sure people want to buy electric vehicles. This will help the ACC-PLI programme do better and help India make batteries, for electric vehicles.

If the government can combine realism (on timelines and DVA ramps) with ambition (in supporting suppliers, securing critical minerals and enabling tech partnerships), India can still build a competitive battery manufacturing base — but it will take patient, well-sequenced action rather than a single policy announcement. Recent analyses and official updates show both the shortfall and the pathways to recovery — which is the policy window India should now seize.