India offers $2.4 billion battery scheme

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India offers $2.4 billion battery scheme

NEW DELHI, Jan 14, Reuters - India's Reliance Industries RELI.NS Softbank Group backed 9984. T Ola Electric and automaker Mahindra Mahindra MAHM.NS submitted bids under the country's $2.4 billion battery scheme, the government said on Saturday.

India last year implemented an incentive program to encourage companies to invest in local manufacturing of batteries as it tries to establish a domestic supply chain for clean transport and build storage for renewable energy.

Hyundai Global Motors, the engineering conglomerate Larsen Toubro LART.NS and battery makers Amara Raja AMAR.NS and Exide EXID.NS have submitted bids, the Ministry of Heavy Industries said.

The ministry said that the program intends to boost domestic manufacturing and foreign direct investment in the country.

India hopes to have 50 gigawatt hours Gwh of battery storage capacity over the next five years, which it expects to attract direct investment of $6 billion.

To qualify for incentives, companies must have at least 5 Gwh of storage capacity and meet certain local content conditions, all of which requires a minimum investment of more than $850 million.

The ministry said that ten companies submitted bids totalling 130 Gwh.

India was also encouraging global companies such as Tesla Inc TSLA.O Samsung 005930. KS LG Energy, Northvolt and Panasonic 6752. Clean auto technology is a key part of India's strategy to reduce pollution in major cities and reduce oil dependence. Electric vehicles EVs make up a small portion of total sales in the country, due to their high price as batteries are imported.

South Asian countries wants electric cars to make up 30% of private car sales by 2030 and electric motorcycles and scooters to make up 40% of such sales, driving demand for batteries which currently contribute about 35% to 40% of the total vehicle cost.