India’s battery energy storage system (BESS) sector is poised for rapid expansion, with cumulative installed capacity projected to increase from 6.3 GWh in FY26 to 302 GWh by FY32. According to a report by Nuvama, the sector will grow at a compound annual growth rate (CAGR) of 91% during this period, driven by rising demand for renewable energy integration, grid stability and round-the-clock power supply. Annual BESS capacity additions are expected to increase from 5.7 GWh in FY26 to 56 GWh by FY32. This growth highlights the increasing importance of energy storage in supporting India’s energy transition and improving the reliability of renewable power.
India’s BESS Demand Creates Opportunities for Domestic Manufacturing
India will require 236 GWh of BESS capacity by FY32 and 1,840 GWh by 2047. However, imports currently meet approximately 89% of the country’s BESS requirements, according to the Nuvama report. This dependence on overseas suppliers creates opportunities for domestic manufacturers as battery costs decline and demand increases. The potential introduction of a framework similar to the Approved List of Models and Manufacturers (ALMM) for solar equipment could support local production and strengthen the domestic battery supply chain. Although lithium-ion technology currently accounts for 98% of the BESS market, the report also identifies opportunities in sodium-ion batteries. In addition, the China+1 supply-chain strategy could encourage manufacturers to diversify production and expand their presence in India.
BESS Manufacturing Economics and Investment Potential
Nuvama identifies cell-to-pack manufacturing as an attractive investment opportunity, particularly in the commercial, industrial and retail segments. According to the report, these segments offer spreads of $18–23 per kWh and EBITDA margins of 17–20%. In comparison, the utility segment generates a lower spread of approximately USD 8 per kWh and an EBITDA margin of 9%. Nevertheless, the utility segment offers an estimated payback period of one to two years. The report also highlights differences in investment returns across manufacturing models. Integrated BESS manufacturing is estimated to deliver an internal rate of return (IRR) of 12%, while cell-to-pack manufacturing could generate an IRR of 31%.
Capital Expenditure and Government Support
Domestic BESS manufacturing requires capital expenditure of approximately $80 million per GWh, according to Nuvama. However, government incentives and competitive manufacturing costs could improve India’s position in the global market. The report highlights the production-linked incentive (PLI) support of ₹181 billion for 50 GWh of battery manufacturing capacity. Combined with competitive labour costs, greater localisation and economies of scale, this support could improve manufacturing competitiveness. Consequently, policy support and expanding domestic production could help India develop integrated BESS manufacturing capabilities and strengthen its export potential. As reported by knnindia.co.in, India’s rapidly growing energy storage requirements, government support and investment in domestic manufacturing could position BESS as a key driver of the country’s renewable energy ecosystem. For manufacturers and investors, the sector offers potential opportunities across battery production, system integration and energy storage deployment.
