PLI for batteries should spur R&D
Why in News
- The Cabinet’s approval to a ₹18,100 crore production-linked incentive (PLI) scheme for setting up big units to manufacture advanced batteries for electrical storage is a welcome development.
- Whether for electric vehicles or storage of renewable power, batteries will play an important role in a decarbonized future.
National Programme on Advanced Chemistry Cell Battery Storage
- India depends on imports for battery storage.
- The National Programme on Advanced Chemistry Cell Battery Storage scheme is a clear demonstration that transitioning the economy away from fossil fuels, while difficult especially for low middle-income countries such as India, is not without economic opportunities.
- The plan, National Programme on Advanced Chemistry Cell Battery Storage, put forward by the department of heavy industry.
- It proposes to create a battery storage manufacturing industry. The proposal is to set up 50 GWh manufacturing capacity for advance chemistry cell batteries by attracting investments totaling ₹45,000 crore.
- It requires each selected manufacturer to set up a production unit with a minimum of 5 GWh capacity, achieve a domestic value addition of at least 25%, and make the mandatory investment of ₹225 crore per GWh within two years.
- It ensures a minimum 60% domestic value addition at the project level within five years.
- The incentive will be paid out on the basis of sales, energy efficiency, battery life cycle and localization levels.
- The plan also provides an impetus to R&D to achieve higher specific energy density and cycles in advanced chemistry cell.
Production-Linked Incentive (PLI) Scheme
- To boost Manufacturing sector of India, Government of India launched ‘Productive Linked Incentives’ as a part of National Policy on Electronics, on April 1, 2020.
- It was launched under the Ministry of Information and Technology.
- It aims to give companies incentives on incremental sales (over FY 2019-20) from products manufactured in domestic units.
- It invites foreign companies to set up units in India, however, it also aims to encourage local companies to set up or expand existing manufacturing units.
- This scheme helps to generate more employment and cut down the country’s reliance on imports from other countries.
- The scheme shall extend an incentive of 4% to 6% on incremental sales (over base year i.e., 2019-20) of goods manufactured in India and covered under target segments, to eligible companies, for a period of five years subsequent to the base year.
Sectors covered under Productive Linked Incentives
- There are 13 Key sectors in Productive Linked Incentives:
- Mobile Manufacturing and Specified Electronic Components,
- Critical Key Starting materials/Drug Intermediaries & Active Pharmaceutical Ingredients,
- Manufacturing of Medical Devices,
- Automobiles and Auto Components,
- Pharmaceuticals Drugs,
- Specialty Steel,
- Telecom & Networking Products,
- Electronic/Technology Products,
- White Goods (ACs and LEDs),
- Food Products,
- Textile Products: MMF segment and technical textiles,
- High efficiency solar PV modules, and
- Advanced Chemistry Cell (ACC) Battery.
Way Forward
- Whether for electric vehicles or storage of renewable power, batteries will play an important role in a decarbonized future.
- Like its commitment to increasing renewable energy generation capacity and the national hydrogen mission, this incentive scheme for setting up battery storage manufacturing units is an unequivocal signal that India is serious about the transition to a decarbonized economy.
- Without shifting away from the dominant lithium-ion technology, it is doubtful if the domestic value addition norms can be met.
- Solid state batteries promise to be all the rage in the near term, while new materials for the anode fascinate current innovators. The PLI scheme must incentivise battery R&D.