Indian BESS manufacturing expansion remains uncertain, despite growing promise

In the face of a fiercely competitive international solar marketplace, India’s PV manufacturers have been a notable success story this decade. However, lithium-ion battery production in the country remains nascent – despite growing demand, the robust advocacy of industry champions, and the country’s supportive “Make in India” policy settings.

“While the domestic battery manufacturing base will definitely expand, the pace of the expansion remains uncertain,” said Bridal Chadha, the associate director of consulting for Crisil – Bridge to India. He notes that the Indian energy storage marketplace will remain “import dependent” based on current dynamics, describing the progress of the battery supply chain in the country as “sluggish.”

Fierce advocates

Yet there are powerful voices backing the expansion of high-tech battery production in India. One of the pioneers of the country’s lithium ion battery production segment argues that the policy and market conditions required to enable the expansion of “Make in India” batteries are currently present in the country.

India’s so-called “Batterywali,” Rashi Gupta, has a commanding presence that belies her diminutive stature. A powerful advocate for Indian lithium-ion battery production, Gupta argues that the stage is set for a rapid expansion of Indian high-tech battery manufacturing, including both lithium-ion cells, modules and packs.

“India has always been a storage country: we like to store everything, food, water, money. And we have to learn how to store electricity in a way that is most economical,” said Gupta – who is the managing director of Indian battery producer Vision Mechatronics.

The nomenclature “Batterywali” refers to Gupta’s pioneering role in India’s battery energy storage industry. Having founded Vision Mechatronics as a “very small robotics project” in 2009, according to the company’s website, Gupta’s company now produces a range of lithium-ion battery products particularly targeting the distributed market segment. 

Speaking to ESS News, Gupta said that a combination of protectionist trade measures on Chiese battery products along with government incentives for production, the strategy that enabled the expansion of solar manufacturing in India, provide both the necessary carrot and stick for battery manufacturers in the country.

“What is happening right now is that India has a lot of tariff and import-based restrictions on goods for China,” said Gupta. “We are looking at more energy resilience and more energy independence for our country. Within the government, there is a lot of interest in manufacturing of energy storage in India.”

The “Batterywali” is not alone in her advocacy. Informa Market’s Julian Thomas, the senior project developer for the Renewable Energy India event, told pv magazine global in September 2024 that Production Linked Incentives (PLI) will attract manufacturers, similarly as it had in solar.

“The same PLI has been activated in the battery storage segment, also with a focus on creating opportunities to build local projects,” said Thomas. “India is moving toward the same strategy followed in solar, to create a domestic ecosystem for battery systems.”

Expanding deployment

With an increased national goal to meet 50% of its electricity demand with renewable energy by 2030, India has been stepping up efforts to accelerate BESS deployment to bolster its electricity network. The government has been incentivising large-scale BESS system development through state and utility-lead tenders – underpinned by federal subsidies, under its Viability Gap Funding (VGF) mechanism. Although reporting of the dispersal of funds in the financial year 2024/25 indicate that the construction of projects under the program are not well advanced.

In March, the Indian government increased the ambition of its energy storage VGF program, to 13.2 GWh of BESS, up from the initial target of 4 GWh. The move reflected the falling cost of large-scale BESS projects in the country, with the allocated funds of INR 37.6 billion ($435 million) remaining unchanged. All tender rounds under the program will be completed by June 2027, with successful projects to be constructed by 2030-31. And, as noted, projects appear not yet to be sufficiently advanced to prompt initial VGF fund dispersal.

However, India has proposed a mandate on BESS to be co-located with utility-scale solar that is likely to have a decisive impact on battery deployment in the country. In February, India’s Ministry of Power advised of the incoming mandate, that would require 10% of a solar project’s peak capacity be matched by a two-hour colocated BESS.

For example, for a 100 MW solar project to win a tender, it will have to be colocated with 10MW/20MWh of BESS.

“It is a phenomenal way forward for energy storage in renewables as well as to have good grid stability in place,” said Gupta. “If something would come for the retrofitting it would be a huge new game.”

Plans but little progress

Stable policy supporting BESS deployment will undoubtedly drive demand, although how much of that will be met by domestic suppliers appears negligible, at least at present.

“India will continue to be highly dependent on imports for batteries,” Crisil – Bridge to India’s Chadha told ESS News. “However, going ahead, price competitiveness and a policy push to encourage domestically manufactured batteries may accelerate the pace [of domestic production].”

Encouragingly, a number of diversified industrial conglomerates have announced plans and begun qualifying for production support. Reliance Infrastructure has secured support for up to 10 GWh of production, and Textiles giant Replus Engitech has announced plans for 5 GWh of production.

Established solar companies are also moving on storage. Vikram Solar is looking to add 1 GWh of advanced battery production capacity to its reported existing 4.5 GW of PV output.

For India’s “Batterywali,” these announcements are signs that a cycle of manufacturing battery capacity is taking shape. ”We are just entering the manufacturing curve and it will take a certain amount of time to reach the pivotal point where we can say that ‘this is made in India.’ But we are entering that stage and very soon you will start to see at least a few gigawatts of manufacturing coming in from India – maybe in 1.5 to 2 years.”

Export to the US

A new potential driver for Indian manufacturing has emerged in recent days: The Trump administration China tariffs. In an April 10 online report, emerging technology market intelligence firm BIS Research argued that India is “uniquely positioned to fill” some strategic opportunities left by the exorbitantly-high tariffs imposed by the US on China.

“India isn’t just a bystander in this global trade shuffle – it’s actively positioning itself as a credible and strategic alternative,” wrote BIS Research, which has its headquarters in Fremont, California.

The analysis noted that the Indian government is backing its battery manufacturing segment with the $2.5 billion PLI subsidy program. Additionally, it cited India’s Industry of Mines which reported that the country is working on critical mineral sourcing deals with Australia, Argentina, and Chile.

“For battery manufacturers, India now offers both scale in demand and increasingly secure upstream inputs – a rare combination in today’s trade climate.”

While the tariff situation remains fluid, with exemptions, implementation delays, or walk-backs all potentially on the cards, it cannot alone be the basis for an investment decision. However, the potential for exports to the United States would present an attractive upside on top of the opportunity presented by India’s domestic market.

Chadha acknowledges the development “warrants close monitoring.”