India to initiate incentive scheme for EV battery production

India is set to initiate the bidding process for an approximately Rs 8,000 crore ($960 million) incentive scheme dedicated to the production of electric vehicle batteries, as disclosed in a Bloomberg report. The scheme will mandate successful bidders to establish cutting-edge chemistry battery plants, collectively generating a capacity of 20 gigawatt-hours. The government is slated to invite bids from potential investors in the coming month.

Several companies, including South Korea’s LG Energy Solution Ltd., and prominent local entities such as Mahindra & Mahindra Ltd., Amara Raja Energy & Mobility Ltd., Exide Industries Ltd., and Larsen & Toubro Ltd., expressed interest during a consultation meeting with government officials. Incentives will be provided to companies over a five-year period based on the sales of locally manufactured batteries.

In the previous year, billionaire Mukesh Ambani’s Reliance Industries Ltd., Ola Electric Mobility Pvt., and Rajesh Exports Ltd. were selected to produce 30 gigawatt-hours of battery capacity and received incentives in the initial phase of the government program.

Anticipating a surge in demand, a report published by research centre RMI India and the government’s think tank Niti Aayog predicts the need for 260 gigawatt-hours of batteries by 2030, serving the expanding markets of electric vehicles, grid-scale energy storage, and consumer electronics.

This battery-centric initiative aligns with India’s broader goal of promoting cleaner transportation. The administration, led by Prime Minister Narendra Modi, is reportedly contemplating a reduction in import taxes for battery-powered vehicles to attract companies like Tesla. Additionally, the government aims to bolster local electric vehicle production through a $3.1 billion incentive program launched in 2021.

Meanwhile, this week, Piyush Goyal, the Union Minister for Commerce and Industry, toured Tesla’s manufacturing facility in Fremont, California. During the visit, he revealed that the American electric car manufacturer is contemplating a twofold increase in its component imports from India.