India Plans Its Own ‘Giga Factories’ for Making Lithium-ion Batteries

Government of India’s policy maker, NITI Aayog, has proposed the establishment of Giga factories in India for the manufacture of lithium-ion batteries, which are required for running electric Vehicles, in the next couple of years. The government of India has unveiled plans to boost its national battery manufacturing and value-adding capabilities that would see it meet its electric vehicle (EV) adoption targets.

Electric vehicles in India

In March 2019, India’s union cabinet approved the setting up of a National Mission on Transformative Mobility and Battery Storage, to drive clean, connected, shared, sustainable and holistic mobility initiatives.

The mission is to draw up a five-year phased manufacturing program (PMP) till 2024 to support setting up a few large-scale, export-competitive integrated batteries and cell-manufacturing giga-plants in India and to localize production across the entire EV value chain.

Notably, ‘GigaFactory‘ is a name given to lithium-ion battery and electric vehicle sub-assembly factory of Elon Musk-promoted Tesla, Inc.

Part of NITI Aayog’s earlier proposal, the recommendation has proposed that Giga factories are established for making lithium-ion batteries in India and at least three-four factories to come up in the next two-three years.
Earlier proposal by NITI Aayog, which is being facing industry backlash, has suggested that post March 31, 2023, only electric (lithium-ion or other advanced battery chemistry only) two and three -wheelers would be sold in the country after an all new sales of two-wheelers below 150cc would be electric post March 31, 2025.

Rajiv Kumar, Vice Chairman of NITI Aayog, tweeted “We have proposed in this mission that Giga factories be established for making lithium-ion batteries in India. We want at least three-four factories to come up in the next two-three years.”

“When the policy (moving to electric two and three-wheelers) comes into effect, you will have domestically produced lithium-ion batteries or other advanced technology batteries,” said Rajiv Kumar in a statement to The Hindu.

According to Kumar, Electric Vehicle batteries was a sunrise industry and India needed to start building capabilities to become a globally competitive player in this area. “The lack of domestic capability will result in massive imports as is the case in electronics,” he said.

Mr. Rajiv Kumar also said that working towards finding lithium-ion and with the advancement of technology, it was likely that it may be replaced with other advanced batteries.

To recall, in September last year, in a warning to India Chairman of Japan’s Suzuki Motor had said that Indian dream of all-electric vehicles on road by 2032 can seriously hamper if India does not start manufacturing batteries used by electric vehicles (EVs) locally in the country.

A few weeks later after that, the Prime Minister Office (PMO) had asked the department of heavy industry to redraft its proposal to offer incentives of as much as $759 million(₹5,500 crore), which will mostly be used to encourage local manufacturing of lithium-ion (Li-ion) batteries used in EVs.

To push the adoption of electric mobility in the country, the Indian government has taken numerous steps of late. Last month, it was reported that the government of India is planning to mandate cab aggregators such Uber and Ola to convert 40% of their fleet of cars to electric by April 2026.

In March, The Union cabinet chaired by the Prime Minister Narendra Modi has approved the proposal for implementation of Phase-2 of Electric Vehicle Scheme ‘Faster Adoption and Manufacturing of Electric Vehicles in India’ (FAME) that include approval of a $1.4 Billion package, which will offer car buyers in the country upfront incentives on purchase of electric vehicles. The package announced will also be used for setting up charging infrastructure and focussing on electrification of public transport.

Early last month, Lucknow-based Sahara India Pariwar announced its entry into the automobile sector with its new electric vehicle (EV) brand called Sahara Evols.

Lithium-ion battery manufacturing

The proposed capacity target for lithium-ion battery-manufacturing base has been raised to 50GW from 40GW. The government is in the process of opening to tenders to set up a 50GW battery manufacturing base at around US$50 billion investment.

To support this, the government is offering financial incentives in the form of subsidies and duty cuts, which could include a reduction in minimum alternate tax to half and import and export duty waivers or cuts for eight years. The successful bidder companies will have to set up production facilities by 2022 and can apply incentives until 2030.

NITI Aayog (National Institute for Transforming India), the premier policy think-tank of the government of India is working to seek proposals from states to identify locations for plants and to provide duty waivers and exemptions to selected manufacturers. The states will be asked to reduce state goods and services tax (GST), provide concessional electricity and facilitate land acquisition, single-window clearance, and environmental clearance.

The large-scale battery manufacturing proposal is a major step towards being competitive at making storage systems. India can move on to manufacturer cells after batteries. The country currently imports batteries and cells from China and the US.

Earlier this year, Bharat Heavy Electricals Limited (BHEL) announced it was in discussions with LIBCOIN consortium to construct India’s first lithium-ion battery (LIB) giga-factory. The plan is to build a 1GWh plant initially and scale up to 30GWh in due course.

In March this year, the government announced it would increase the basic import duty on lithium-ion cells to 10 percent from April 2021, from the current 5 percent. Lithium-ion cells are used in the manufacturing of lithium-ion accumulator for EVs. Import duty on battery packs will also increase from 5 percent currently to 15 percent from April 2021.

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