Advanced Chemistry Cell Production Linked Incentive Scheme | 14 Feb 2026

Source: TH 

Why in News?

A recent report highlights serious implementation challenges in India’s Advanced Chemistry Cell Production Linked Incentive (ACC-PLI) scheme.

What is the ACC-PLI Scheme? 

  • About: Launched in October 2021 by the Ministry of Heavy Industries, the scheme aims to promote domestic manufacturing of next-generation battery cells, especially lithium-ion batteries used in electric vehicles (EVs) and energy storage systems. 
    • Advanced Chemistry Cells use technologies like lithium-ion that offer higher energy density, longer life and faster charging, unlike conventional lead-acid batteries traditionally used in vehicles and inverters. 
  • Objective: The scheme seeks to develop a domestic battery supply chain, including cathode, anode, and electrolyte manufacturing, to reduce import dependence (especially on China), attract private investment and global technology partnerships, lower battery costs, and accelerate EV and energy storage adoption. 
  • Target:  The scheme targets the creation of 50 GWh of battery manufacturing capacity by 2026, supported by a financial outlay of ₹18,100 crore. 
  • Incentives: Manufacturers are offered incentives up to ₹2,000 per kWh of battery sold, subject to a minimum investment of ₹1,100 crore and phased domestic value-addition requirements (25% within two years and 60% within five years). 
    • Despite initial enthusiasm, only 30 GWh of the proposed 50 GWh capacity was allotted, and as of October 2025, just 1.4 GWh has been commissioned, with 8.6 GWh under development but delayed. 
  • Status: As battery production has not begun, no incentives have been disbursed against the ₹2,900 crore target, and project implementation has slowed, with some companies scaling back expansion plans. 
    • This has resulted in a sharp gap between expectations and outcomes, with only 1,118 jobs created against a projected 1.03 million and EV demand growth falling short of projections. 

Production Linked Incentive (PLI) Scheme 

  • About: The Production Linked Incentive (PLI) Scheme, launched in March 2020, aims to boost domestic manufacturing, reduce imports, and generate jobs, starting with three sectors and later expanding to 14 key sectors. 
  • Mechanism: Under the PLI framework, both domestic and foreign companies receive financial incentives for manufacturing in India, calculated as a percentage of incremental revenue over a period of up to five years. 
  • Targeted Sectors: It covers mobile manufacturing, automobiles and auto components, pharmaceuticals, electronics, textiles, solar PV modules, ACC batteries, and drones. 
  • Incentives: Incentives are linked to incremental sales, with select sectors also assessed on performance and local value addition, while promoting R&D investment for global competitiveness. 

Frequently Asked Questions (FAQs) 

1. What is the ACC-PLI scheme? 
It is a government scheme launched in 2021 to promote domestic manufacturing of advanced battery cells, especially lithium-ion batteries used in electric vehicles and energy storage. 

2. What are Advanced Chemistry Cells? 
They are modern high-performance batteries with higher energy density, longer life and faster charging compared to traditional lead-acid batteries. 

3. Why is the scheme important for India? 
It helps reduce battery imports, build a local supply chain, and support the growth of electric vehicles and clean energy storage. 

UPSC Civil Services Examination, Previous Year Questions (PYQs) 

Prelims

Q. Consider, the following statements : (2023)

Statement-I : India accounts for 3.2% of global export of goods. 

Statement-II : Many local companies and some foreign companies operating in India have taken advantage of India's ‘Production-linked Incentive’ scheme. 

Which one of the following is correct in respect of the above statements? 

(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I 

(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I 

(c) Statement-I is correct but Statement-II is incorrect 

(d) Statement-I is incorrect but Statement-II is correct 

Ans: (d)