India Plans Mandatory Localization for Battery Storage to Counter China
The Indian government is actively considering a proposal to mandate domestic components in battery energy storage systems. This move aims to curb reliance on imports, particularly from China, while addressing critical security concerns. However, it risks increasing power costs during a pivotal phase of the country's energy transition.
Details of the Proposed Mandate
Officials are discussing a requirement for wind and solar farms, along with standalone storage systems, to use battery storage with at least fifty percent local content. This would cover components like battery management systems, containers, and inverters, though battery cells are excluded from the initial mandate. The government may also introduce an approved list of manufacturers and models, similar to existing solar industry policies.
Recent consultations involved state-run firms such as NTPC Ltd and Solar Energy Corp. of India, as well as private players like JSW Energy and Avaada Electro. Discussions focused on transition timelines for indigenization. No final decisions have been made yet, but the goal is clear: reduce foreign exchange outflow and strengthen the domestic supply chain.
Security and Strategic Drivers
Security concerns are a major factor behind this push. The power grid faces constant cyber threats, with officials highlighting vulnerabilities in Chinese-made equipment. Mandating local content and trusted vendors would allow tighter control over critical infrastructure. With numerous daily cyber-attack attempts on the national grid, many originating from China, Russia, and Singapore, localization is viewed as a national security imperative.
India targets forty-seven gigawatts of battery storage capacity by 2032 at a cost of ₹3.5 trillion. The components subject to indigenization account for about thirty-five percent of industrial-scale battery costs. These systems are essential for storing electricity from solar and wind projects during non-generating periods.
Cost Implications and Industry Perspectives
The shift has sparked debate over its impact on green energy adoption. Former power secretary Alok Kumar warned that aggressive mandates could raise costs and slow project bankability, potentially affecting ambitious targets. He emphasized the need for balance to avoid slowing adoption through higher tariffs.
However, some analysts argue the financial impact may be manageable. Energy analyst Duttatreya Das noted that previous domestic content requirements for solar modules did not severely derail expansion when sufficient lead time was given. Gradual localization could benefit the sector and economy beyond immediate cost spikes.
Building Domestic Capacity
The proposal follows a recent mandate requiring twenty percent localization for projects under a viability gap funding scheme. The new fifty percent target represents a significant escalation. Industry experts believe a supply chain for non-cell components could be established within twelve to twenty-four months with the right volumes and duty structures.
Currently, global leaders in battery storage include China's CATL, France's Engie, and US-based Fluence Energy. By forcing these players to manufacture locally or partner with Indian firms, the government hopes to replicate 'Make in India' successes seen in automotive and mobile phone sectors.
Scaling Up to Meet Future Demands
China dominates the global battery supply chain, controlling most lithium processing and cell manufacturing. India has about fifteen gigawatts of assembly capacity but only seven hundred megawatt-hours operational. This gap is stark compared to the Central Electricity Authority's estimate of needing two hundred thirty-six gigawatt-hours by 2030 to manage renewable power intermittency.
Tendering activity is accelerating rapidly, with approximately sixty gigawatt-hours auctioned in 2025, up from twenty-four in 2024. Experts suggest implementing value-addition norms progressively, giving time to build capabilities. Startups are already producing indigenous connectors and power electronics, indicating growing domestic potential.
