Govt to offer cash subsidy as means to encourage domestic manufacturing of storage batteries

Economy


Government will offer cash subsidy on the output and products with higher performance specifications will be eligible to avail the incentives under its mega plan to push for domestic manufacturing of storage batteries, NITI Aayog has proposed in the draft bid document for manufacturing of advance chemistry cells (ACCs) in India.

Union Cabinet, on Wednesday, approved Rs 18,100 crore worth of production linked incentive scheme for ACCs as part of the mega scheme for 10 sectors including automobiles, textiles and food processing among others.

Advance Chemistry Cells (ACCs) are the new generation advance storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required.

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Government had in 2019 launched the National Mission on Transformative Mobility & Battery Storage to promote electric vehicle penetration in India and to support 50 giga watt hours of domestic ACC manufacturing.

“First, the cash subsidy shall be offered on output i.e. the volume of cells manufactured and sold by the beneficiaries. Second, it’s a technology agnostic initiative, whereby only cells with higher performance specifications shall be eligible to avail the incentives,” NITI Aayog said.

“While the subsidy benchmarks shall be determined in a manner that cells with better quality or performance characteristics attract higher subsidy, thereby encouraging manufacturers to invest into Research & Development and to Manufacture such cells in India,” it said.

“Third, a value weighted based bidding process on prospective commitment criteria shall be followed, to promote large scale capacity deployment with emphasis on promoting domestic manufacturing and ensuring transparency.

According to the bid document, the subsidy support will be limited to a cumulative 50 GWh of ACC manufacturing capacity in India, with a single beneficiary not allowed more than 20 GWh cell manufacturing facility.

Furthermore, to encourage economies of scale, minimum bids may be restricted to 5 GWh capacity, which may be developed in phases over a five-year window. Moreover, in order to ensure the bankability of the manufacturing facility and with emphasis upon key performance indicators, the incentive framework has been fused with the principles of public private partnership, it said.

“The structure thus adopted for the programme bid documents ensures that there is an optimal sharing of risk between the beneficiary firm and the government, and thus expected to bolster investors’ confidence and become instrumental in putting India as a leader on the world map in ACC manufacturing,” the Aayog said in the bid document. The Aayog has invited suggestions on the draft model document till December 14.



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