PLI Scheme For Battery Recycling: A Cornerstone Opportunity For India’s Energy Security

A Production Linked Incentive (PLI) scheme is an economic initiative taken by governments to incentivise companies on incremental sales from domestically manufactured products. PLIs aim to boost the manufacturing sector, generate employment, inspire FDI inflow, and reduce reliance on imports by encouraging companies to set up or expand existing manufacturing units. 

Given India’s enthusiastic drive toward Net Zero sustainability, the policy environment is ripe, fostering a supportive ecosystem designed to prosper from circularity. 

PLI schemes have proven to be key building blocks of the larger ‘Make in India’ imperative. DPIIT Secretary Rajesh Kumar Singh highlighted that PLI schemes have given a massive boost of 76% in FDI in the manufacturing sector in FY22 ($21.34 Bn) compared to the previous FY21 ($12.09 Bn). 

The growth covers 14 sectors with an outlay of INR 1.97 Lakh Cr. The schemes have also resulted in value addition of around 20% in mobile manufacturing within three years.

Consequently, any PLI schemes for battery recycling and energy transition materials would aim to attract investments in these sectors to build capacity, maximise efficiency, and support innovation.

Why A PLI For Battery Recycling?

Battery recycling is crucial for eco-sustainability, resource circularity, and availing the full economic benefits of clean and circular technologies. This is because battery recycling is a key source of critical energy transition materials used in a variety of sectors. 

Recycling helps regenerate in-demand resources inside ‘secondary materials’ ecosystems and reduces the need for mining new ‘primary’ materials. And that is recycling alone; with the reuse or repurposing of end-of-life EV batteries, the economic returns and utility of batteries expand further. 

With the surge in demand for EVs and renewable energy solutions, we anticipate battery waste recycling to potentially reach a whopping 5 million tons by the decade’s end.

India has accelerated this growth via the Battery Waste Management Rules (BWMR 2022) and PLI schemes for Advanced Cell Chemistry (ACC). Currently, almost all recycled material in India gets exported because there is negligible domestic cell manufacturing industry. 

This will change as the Advanced Chemistry Cells (ACC) PLI scheme takes effect, additionally, a significant percentage of batteries still do not reach recycling. 

According to estimates by NITI Aayog, close to 100 GWh of ACC batteries will annually retire by 2030.

What Can A PLI Scheme for Battery Recycling Look Like?

Underscoring the need for skilled and well-equipped entities to handle battery recycling, given the hazardous nature of batteries, industry pioneers recommend that a key pillar of a proposed battery recycling PLI scheme be a percentage cashback on per kg or ton of recovered critical mineral salts or pure metals recovered and sold. In effect an incentive to expand capacity.

To incentivise innovation, India’s Battery Recycling PLI can introduce premium bonuses for companies that have higher recovery rates and better grades of final products. It could be a similar certificate like EPR that would allow companies to earn more rewards for breakthrough performance and innovation than only minimum-baseline goals.

These initiatives provide financial support to companies that invest in innovative solutions for reducing waste generation and increasing resource efficiency in their production processes. A CapEx subsidy to recyclers of e-waste, along with the PLI schemes currently devised, would also fit well. PLI schemes can only achieve 100% of their potential if the raw materials for the industries are also sourced locally and not imported. 

A PLI For Battery Recycling Can Feed Various Other Ecosystems

Existing PLI schemes for battery-related sectors include the ‘National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ and ‘Large Scale Electronics Manufacturing’. 

These schemes aim to achieve an ACC manufacturing capacity of 50 GWh of ACC batteries by 2025-26 and attract investments in electronics manufacturing clusters across India, respectively.

Since a PLI for battery recycling will build a domestic supply of secondary materials built on circularity, the beneficiaries of the ACC scheme will also thrive with a stable supply of raw materials. Similarly, the battery recycling PLI will also subsequently cascade with the PLI for Large Scale Electronics Manufacturing.

In Conclusion

Given the significant successes of recent PLI schemes in India, and the industry breakthroughs in viability, safety, and scale; the macro effects of implementing the PLI scheme for battery recycling in India will not only reach renewables and electric vehicles, but also the consumer electronics industry, aerospace, defence, railways, electricity grids, and space.

PLI schemes have proven to contribute to an increase in production, employment generation, and economic growth. A PLI for battery recycling is essentially a PLI for the domestic production of energy transition materials for India, making it a cornerstone opportunity to accelerate India’s SDGs in the spirit of ‘Amrit Kaal’.