How Local Manufacturing of BESS Could be a Game Changer for India

Atma Nirbhar Bharat emphasizes self-reliance through strong domestic capabilities and local manufacturing of BESS is central to this mission. By building indigenous energy storage systems, India reduces import dependence, strengthens supply-chain security, boosts employment, and accelerates renewable integration—paving the way for a resilient, future-ready energy ecosystem.

India’s dependence on BESS imports is high because domestic cell manufacturing is still nascent, and most active cells/packs are imported—predominantly from China. In FY 2023–24 India’s lithium-ion battery import bill was ₹24,346 crore (≈USD 3.0 billion), and imports have continued to grow into 2024–25 with a rough estimate of ₹29,200–31,650 crore (≈ US$3.5–3.8 billion). Because imports fall under multiple HSN codes and varying customs classifications, covering cells, packs, sub-components, and consumables, a reliable consolidated import bill is not available in the public domain.

This import dependence means India is effectively moving from an era of “petro-dollars” to a new vulnerability of “lithium-dollars” concentrated in China’s supply chain. Domestic PLI and licensing deals are accelerating local cell projects, but large-scale self-sufficiency is still emerging.  Recent tender volumes have been large and accelerating.  As of Nov 2025, 75 GWh of BESS Capacity tenders (excluding cancelled tenders) have been shared, of which 55 GWh have been awarded and/or are in various stages of execution, and 20 GWh are in the tendering process.

There continues to be considerable ambiguity in the customs classification of various BESS sub-components—including HV busbars, HV junction boxes, cooling systems, and sensor assemblies—which results in inconsistent duty assessments across ports and consignments.

To address this, we need a clear Government notification specifying the correct HSN codes, duty applicability, and import treatment for these items. We also need a differentiated duty structure: lower duties for subsystems not yet manufactured in India (such as CCS units and chillers) and higher duties for components that are easily manufacturable domestically (such as harnesses and sheet metal).

The recent round of BESS tenders in India—spanning standalone BESS, Solar-BESS hybrids, FDRE, and RTC—has seen unusually low prices. While declining battery prices in China are often cited as the primary driver, the reality is more nuanced. Developers are also taking aggressive, forward-looking positions on the future trajectory of lithium and cell prices, assuming continued reductions over the next 12–24 months. However, these assumptions may not hold in full, especially in light of the recent policy actions and market interventions by the Chinese government, which could affect pricing stability, export dynamics, and supply availability. As a result, today’s bids may reflect optimism that does not entirely align with emerging-market signals.

China’s Special Action Plan, launched on 12 September 2025, sets an ambitious target to add over 180 GW of new-type energy storage by 2027, solidifying China’s position as the world’s largest BESS market. With China already crossing 100 GW of new-type storage by mid-2025, the plan requires an additional 80 GW (≈200–240 GWh) to be deployed in just 2.5 years. Given that over 97% of all new storage in 2024 was lithium-ion, this policy cements lithium-based BESS as the anchor technology.

For the industry, this becomes the new baseline for capacity planning, raw-material contracting, and supply-chain investment. The plan also mobilises ¥250 billion (~$35 billion) in project investments. The aggressive storage expansion will significantly increase domestic Chinese demand for lithium carbonate, LFP materials, and battery-grade raw materials.

Until now, many global developers have bid aggressively in tenders, assuming that lithium and cell prices will continue to decline. However, China’s new policy shifts the equation:

• Demand for lithium will rise, tightening supply in the medium term.
• Chinese producers may redirect more material to domestic projects, reducing export flexibility.
• The government’s industrial policy focus could stabilize or even push up lithium prices, contrary to expectations of a sustained fall.
• International BESS cost forecasts that assumed sharp lithium declines may now need revision.

In short, the Special Action Plan is a demand accelerator. While global developers have been banking on cheaper batteries, China’s domestic consumption surge could slow price declines or even create mild upward pressure on lithium prices over the next 12–24 months.

India’s EV ecosystem has helped build a strong base of suppliers for many BESS components, but true indigenous BESS manufacturing—especially Cell-to-Pack—is far more complex. It demands precision parts, advanced compression and bonding engineering, robust thermal management, and now large-scale fire testing as mandated by CEA. Add to this the need for domestically developed EMS software, and it’s clear that India must scale capabilities rapidly. While challenging, successful localisation can yield 6–8% cost savings per container.

The ask from the policy makers and in the upcoming union budget, for local Manufacturing of BESS must include a differentiated‐duty and customs-classification framework to support BESS localization — with lower tariffs on critical subsystems (e.g., CCS, chillers, battery management electronics) that India cannot yet manufacture, and higher duties on easily domestically produced components (e.g., harnesses, sheet metal). A clear, unified customs notification must define HSN codes and duty assessment to eliminate ambiguity at ports.

We also urge the introduction of a tailored PLI scheme for full BESS manufacturing and a mandate for domestic content in large tenders — fostering supply-chain resilience and driving down costs through indigenous production. Local BESS manufacturing is essential for reducing India’s import dependence, stabilising costs, and strengthening supply-chain resilience. Clear customs classification, differentiated duties, and targeted incentives—along with domestic-content mandates, prioritise localising the full value chain (cells → packs → systems) and accelerating commissioning of PLI beneficiaries —will accelerate self-reliance.

This article has been authored by Venkat Rajaraman, Chief Executive Officer of Cygni Energy Pvt. Ltd.

Also Read: Cygni Energy Inaugurates BESS Manufacturing Facility