The ministry of heavy industries (MHI) has issued fresh notices to all three beneficiaries of the Advanced Chemistry Cell (ACC) production-linked incentive (PLI) scheme who failed to meet mandated timelines for setting up their manufacturing plants.
The government has directed Ola Electric, Reliance New Energy and Rajesh Exports (ACC Energy Storage) to pay penalties accrued till September 30, signalling that requests for extensions and penalty waivers have not been accepted.
This marks a clear hardening of the Centre’s position on implementation of the ACC-PLI scheme, which was announced in 2021 with an outlay of Rs 18,100 crore to build 50 GWh of domestic battery cell manufacturing capacity. Under the terms of the programme, companies are required to establish plants within two years of signing final agreements and meet domestic value-addition and investment milestones. Delays attract penalties calculated daily and deducted from future incentive payouts.
All three companies had first sought relief in February, after the initial showcause notices were issued for failing to comply with timelines. They maintained that sourcing critical equipment and plant machinery from China had been severely affected by export restrictions and shipping delays. The upstream supply chain for advanced chemistry cell production remains heavily dependent on specialised imports, and companies claimed that bottlenecks had forced them to slow execution despite having obtained all central and state-level approvals.
Government’s response
However, the government now appears to have rejected that reasoning. According to officials, the penalties remain applicable from January 1, 2025, and no relaxation has been granted. Ola Electric, which received the largest allocation of 20 GWh, faces penalties of Rs 12.5 lakh per day, while the two 5 GWh beneficiaries – Reliance New Energy and Rajesh Exports – have been fined Rs 5 lakh a day each. MHI has calculated that Ola has already accumulated dues of around Rs 35 crore, while the other two companies each owe about Rs 14 crore.
Officials aware of the assessment process said that two of the firms have shown virtually no progress on the ground. While Ola has reported trial production and limited capacity build-up, it remains far below its committed scale and has revised its capacity targets downward. In July, the company had already indicated that it would not pursue more than 5 GWh of capacity until FY29 and had acknowledged that it could incur up to Rs 100 crore in penalties for missing scheme milestones. It had also said that discussions were underway with the government regarding deadline reviews, but MHI has now taken the position that all beneficiaries must adhere to the original timelines.
Response from companies awaited
It has now been three years since 30 GWh of capacity was allotted under the ACC-PLI scheme – 20 GWh to Ola Electric, 5 GWh to Reliance New Energy and 5 GWh to Rajesh Exports. The December 2024 milestone for commissioning plants remains mandatory, and the fresh notices are intended to enforce compliance after months of delays. Officials said further action will depend on the responses submitted by the companies.
Emails sent to Ola Electric, Reliance New Energy and Rajesh Exports seeking their comments on the penalty notices remained unanswered till the time of going to the press.