Niti Aayog seeks Cabinet nod for battery push


NEW DELHI: The Niti Aayog has sought Cabinet approval for a proposal to build up to 10 large factories that would get subsidies to produce lithium-ion batteries used in electric vehicles. Once it gets the nod, the Aayog will invite bids for setting up these gigafactories, with a total capacity of 50 Gigawatt hours (GWh), over 10 years, a senior government official told ET.

The projects would cost as much as $5 billion (Rs 35,500 crore).

The move is part of an effort to push use of EVs, for which high battery cost is a big hurdle. The batteries, currently being imported, account for more than half the cost of an EV and local manufacturing could help bring this down.


The finance ministry has already okayed the Aayog’s proposal to offer Rs 700 crore a year in subsidies to battery makers, starting 2022.


Policy for Gigafactories

The official told ET that the Aayog, which moved a Cabinet note on the proposal, had also put in place a policy framework for setting up gigafactories after extensive stakeholder consultation. This proposed policy framework would soon be taken to the Cabinet.

“Faster rollout of battery manufacturing in India is a prerequisite for successful electric vehicle mission,” the official said.

According to the official, the proposed battery policy is output-based rather than input-based, with subsidy linked to the capacity creation committed and the level of indigenisation. Thus, companies will be eligible for subsidy from the government if they achieve 60% indigenisation by 2025, when they are expected to attain full-scale production.

As per the proposal, battery manufacturers will be allowed to avail of entire depreciation in one go. Besides, duty-free imports of lithium, iron and cobalt will be allowed to power the advanced cell chemistry in place of the traditional lead batteries.

Any new technology that evolves over the next 10 years will also be eligible for subsidy.

The government is eyeing a minimum factory size of 5 GWh, which means a maximum of 10 players would be allowed through a competitive bidding process to set up shop in India. Typically, a gigafactory with 10 GWh capacity requires an investment of $1 billion.

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