Beneficiary firms may get a relaxation of 2 to 4 months only
The government may not grant a year of extension requested by the beneficiary companies under the Advanced Chemistry Cell (ACC) PLI scheme to meet their investment and domestic value addition (DVA) targets, said a source aware of the matter. However, the companies may get a relaxation of two to four months to meet the targets, he added.
Ola Electric, Reliance New Energy Solar and Rajesh Exports are the three companies currently working under the PLI scheme to manufacture battery cells in India. The Ministry of Heavy Industries (MHI), the nodal ministry for the PLI scheme, had sent notices to these companies in March to pay penalties as per the provisions of the scheme for not meeting project targets.
While Ola Electric was asked to pay Rs 12.5 lakh per day from January 1, 2025 till the time it meets the targets, Reliance New Energy and Rajesh Exports are facing a penalty of Rs 5 lakh per day.
According to the scheme, the companies had to set up a manufacturing plant within two years (by December 2024) of signing the project agreement. However, none of the beneficiaries could meet the requirements.
The three companies had later reached out to the ministry seeking extension of the project deadlines.
“It is unlikely that they may get an extension of one year. They have applied for an extension and the ministry is considering their request. They can get an extension of 2 to 4 months at most. That will also be decided after considering their requirements,” the official cited above said.
An email sent to the ministry of heavy industries, the nodal ministry for the scheme, on the matter did not elicit any response.
In an analyst call on Thursday, Ola Electric CEO Bhavish Aggarwal acknowledged that the company was running a year late on the timelines given in the PLI scheme.
“(We are) roughly a year or 5 quarter delayed from the timelines that we had given in our original PLI submission a few years back.”
He said the 5 Gwh capacity was now planned to be achieved by early FY27. The company was in continuous engagement with the government, Aggarwal said, expressing hope that the penalties under the scheme might be kept to the minimum as the government had been “very empathetic” towards the company.
“There was some news on penalty last quarter but the government in our private conversations has also been very open and empathetic to the fact that it's a complex endeavor. They might be willing to manage the penalties to a minimum. Also, it's not a very onerous penalty clause,” Aggarwal said during the call.
The Rs 18,100 crore PLI scheme was launched in 2021 for achieving a battery cell manufacturing capacity of 50 Gwh. Ola Electric has been allocated a capacity of 20 Gwh, the most among the three, while Reliance New Energy and Rajesh Exports are required to achieve a manufacturing capacity of 5 Gwh and 5 Gwh, respectively. The project agreements with the companies were signed in 2022 after the first round of bidding for capacity allocation.
Another 10 Gwh capacity was allocated to Reliance Industries in September last year after second round of bidding. There still remains 10 Gwh of capacity to be allocated under the scheme.