India’s progress towards a future powered by renewable energy is gathering pace, driven by adoption of battery energy storage system (BESS). Substantial investments, strategic deals and robust policy support are powering growth in the BESS segment as the country targets 500 GW of non-fossil-fuel installed generation capacity by 2030. The Central Electricity Authority (CEA) estimates 60.6 GW of energy storage requirement by 2029-30, with BESS contributing ~69% (41.6 GW/208 GWh) and pumped storage plants contributing ~31% (18.98 GW/128.15 GWh).
Demand for batteries is widespread, spanning sectors such as grid-scale energy storage, electric vehicles and off-grid applications. This, in turn, has attracted a wide range of investors, including domestic conglomerates such as Reliance and Adani, and global players such as Fluence. In the grid-scale segment, energy storage demand from utilities has seen significant growth. For standalone BESS projects, the capacity tendered surged to 21.5 GWh in 2023 from only 6 GWh in 2022. However, the capacity tendered dropped to 5.5 GWh in 2024, driven by sharper focus on integrated BESS with RE projects. Notably, around 15 GW of RE capacity in 2024 required BESS as part of the project configuration.
As demand and market participation continue to rise, the capital investment in battery manufacturing in India is expected to surge to Rs 2.2 lakh crore between fiscals 2026 and 2030.
Government initiatives are playing a crucial role in unlocking investments in the BESS sector. These initiatives recognise the importance of energy storage for grid stability and facilitating increased renewable energy penetration. On the demand side, the 5% mandate of energy storage obligation on states by 2030 is a significant enabler, driving adoption of BESS. On the supply side, the government has mandated that at least 10% energy storage capacity should be co-located with solar power projects. The government has also launched the Viability Gap Funding scheme, allocating Rs 3,760 crore to subsidise 40% of the capital costs for 13.2 GWh of grid-scale BESS projects to be developed by 2026. The scheme was approved in September 2024.
In May 2021, the government approved a Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) battery storage, with a budget outlay of Rs 18,100 crore, aimed at boosting domestic manufacturing of advanced batteries, reducing import dependence and strengthening the ecosystem for electric mobility and renewable energy storage. The scheme targets establishment of 50 GWh of ACC manufacturing capacity, with an additional 5 GWh for niche ACC technologies.
Figure: Capacity awarded under PLI scheme for ACC, GWh
Source: Crisil-Bridge To India
That said, despite the growth in demand and policy support, the BESS domestic supply chain has been a slowcoach. The PLI scheme has been facing challenges, with no operational gigafactories established as of March 2025. The Ministry of Heavy Industries has already imposed considerable penalties on manufacturers for the missed deadline.
The tight timelines pose a significant challenge, further exacerbated by lack of indigenous R&D in India and scarcity of skilled manpower in ACC technologies. Notably, the PLI scheme requires a 25% domestic value addition (DVA) within two years and 60% within five years. Meanwhile, India continues to rely heavily on imports for critical battery inputs such as lithium, cobalt, nickel and graphite. Establishing a local supply chain is a long-term endeavour as lithium mining, such as in Jammu and Kashmir, is still in the nascent stage and there is no refining capacity. As a result, companies are forced to rely on expensive imports, at least in the initial stage, which undermines their ability to meet DVA targets and maintain profitability.
The industry is also exploring alternative battery chemistry such as solid-state and sodium-ion batteries to mitigate the supply-chain risk associated with critical minerals. However, establishing a domestic supply chain will require a significant investment of time and resources, besides further policy support.
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