The Impending Decision
The Ministry of Heavy Industries (MHI) is expected to finalize a decision within days regarding the removal of Rajesh Exports from the government’s Production-Linked Incentive (PLI) scheme for advanced chemistry cell (ACC) battery storage. This move follows a sweeping interim order issued by the Securities and Exchange Board of India (SEBI) on June 3, which accused the Bengaluru-based company of orchestrating large-scale financial irregularities.
Government sources indicate a strong consensus within the Ministry of Heavy Industries to revoke the firm’s beneficiary status. Minister H.D. Kumaraswamy is slated to review the findings and formalize the government’s position following his return from an official diplomatic trip.
Understanding the SEBI Allegations
The SEBI investigation, detailed in a 109-page ex parte interim order, paints a picture of systemic financial misrepresentation. The regulator alleges that Rajesh Exports, historically known as a gold jewelry manufacturer, inflated its reported revenues by a staggering Rs 15.15 lakh crore between fiscal years 2021 and 2025.
According to the regulator, this figure accounts for nearly 99.8 percent of the revenues attributed to the company’s subsidiaries during that period. Beyond revenue inflation, the order cites evidence of fund diversion and opaque related-party transactions involving Elest Pvt Ltd and ACC Energy Storage Pvt Ltd—two entities central to the company’s pivot into lithium-ion battery manufacturing.
Impact on the Battery Storage Sector
The PLI scheme for ACC battery storage was designed to bolster India’s domestic manufacturing capabilities for electric vehicle components and renewable energy storage. By incentivizing companies to set up local production facilities, the government aims to reduce reliance on imported battery cells.
Rajesh Exports’ potential disqualification creates significant uncertainty for the projects tied to its subsidiary, ACC Energy Storage Pvt Ltd. Industry analysts suggest that the government must balance the need for strict compliance with the necessity of maintaining momentum in the critical battery manufacturing sector, which is currently a cornerstone of India’s green energy transition.
Regulatory and Corporate Response
As part of the interim measures, SEBI has prohibited company Chairman Rajesh Mehta from trading in the firm’s securities and has mandated a comprehensive forensic audit of the company’s financial records. The regulator’s move is intended to protect investor interests while the investigation into disclosure failures proceeds.
In response to the allegations, Rajesh Exports and Chairman Rajesh Mehta have formally denied any wrongdoing. The company has stated that it is fully cooperating with the investigative authorities to resolve the issues and clear its financial records.
Industry Implications and Future Outlook
The potential removal of a major player from the PLI program sends a strong signal regarding the government’s commitment to corporate governance and transparency in state-sponsored incentives. Future applicants to government industrial schemes may face more rigorous financial scrutiny and heightened compliance checks as ministries seek to avoid association with entities under regulatory fire.
Observers are now watching to see whether the Ministry will reallocate the incentives originally earmarked for Rajesh Exports to other qualified participants in the battery storage space. The final outcome will likely set a precedent for how the government handles ongoing compliance issues within the high-stakes manufacturing incentive landscape.
