By Ashok Thakur and Shraddha Kakade
- Cash subsidy to ACC manufacturers through a performance-linked incentive scheme
- Subsidy disbursement based on the levels of performance specifications of ACC manufactured and the ability to make actual sales in the market
- Composite matrix of customs duty will be imposed to incentivize entire phased manufacturing for cells
- Bonus structure to incentivize production of cells with higher performance specification and technological advancements
Finance Minister Nirmala Sitharaman on Saturday, May 16, announced government plans to launch an incentive scheme for the promotion of new “champion sectors” with a focus on advanced cell battery storage and solar PV manufacturing in an effort towards making ‘Self-Reliant India’ (Aatma Nirbhar Bharat).
The emphasis of this scheme is on cell manufacturing as it aims to reduce India’s reliance on the import of battery cells and substitute it with domestic manufacturing. The plan is to come up with a suitable performance-linked fiscal incentive program to incentivize advanced cell chemistry (ACC) manufacturing in India said Aman Hans, Public-Private Partnership Consultant at the NITI Aayog and Secretary of the ACC Battery Storage Program.
This announcement came as the minister announced other policy reforms on Saturday including fast-tracking of investment clearance through Empowered Group of Secretaries, constituting a Project Development Cell in each ministry to prepare investable projects and coordinate with investors and central and state governments, ranking of states on investment attractiveness to compete for new investment.
The battery packaging sector in India took off organically without much government backing Hans noted, however, the government has realized there is a need for intervention in cell manufacturing as it continues to rely heavily on imports.
Speaking of the budget for the incentive program for ACC battery manufacturing, Hans added that the government is in the final stages of evaluating a 50GWh ACC manufacturing proposal of NITI Aayog. The minimum size for individual factory under the proposed mission is 5 GWh and the maximum is 20 GWh. The performance-linked incentive scheme is designed such that the government will be giving actual cash incentive to the ACC manufacturers. The subsidy disbursement will be based on the levels of performance specifications (i.e. cell cycle life and energy density) of ACC manufactured and the ability of the firm to make actual sales in the market.
Over and above this, the NITI Aayog has proposed to incentivize the entire national ACC manufacturing by proposing a composite matrix of customs duty which will be imposed to facilitate trade for upstream components like raw materials and cell component and there will be relaxation in terms of import duties. While for companies importing end component where the domestic value addition is very minimal, there will be higher custom duty, Hans explained. In addition, for investor assurance, the government will be executing a composite agreement that will ensure the bankability of such projects.
The National Mission for Transformative Mobility and Battery Storage will be the implementing agency for the scheme and the application process will be conducted through a transparent bidding process. Although the recent announcement by the finance minister did not propose a date or timeline for the launch of the program, Hans confirmed it is awaiting cabinet approval and has been accorded the highest priority by the government.
“We are confident that there would be a significant response from the industry as soon as the cabinet approval is announced for the ACC manufacturing program,” said Dr. Rahul Walawalkar, President of India Energy Storage Alliance (IESA).
IESA is a leading industry body that has been advocating for accelerating the manufacturing of advanced energy storage technologies in India since 2017. The alliance has also worked with the Department of Science and Technology to develop an R&D roadmap for EV which includes additional areas to support domestic R&D and industry-academic partnerships.
“With the announcement of the inclusion of advanced cell battery storage in the “Champion Sector” and anticipated cabinet approval of the Gigafactory mission, we look forward to India becoming a global hub for R&D, manufacturing and adoption of advanced energy storage and EV technologies by 2022,” Dr. Walawalkar added.