India’s Union Budget 2026 has delivered a decisive policy signal for the expansion of the country’s grid-scale energy storage sector, introducing targeted fiscal incentives aimed at accelerating domestic manufacturing of lithium-ion batteries for Battery Energy Storage Systems (BESS).
In a major boost to the clean energy value chain, the government has extended the Basic Customs Duty (BCD) exemption on capital goods used in lithium-ion cell manufacturing to include equipment specifically deployed for BESS applications. The move is expected to significantly reduce production costs, improve project viability, and attract fresh investments into India’s battery manufacturing ecosystem.
Industry stakeholders view this policy intervention as a strategic enabler for large-scale deployment of grid storage infrastructure, which is increasingly seen as essential to stabilise renewable energy supply and ensure round-the-clock power availability. As India rapidly expands its solar and wind capacity, the role of BESS in balancing intermittent generation is becoming central to national grid planning.
The Budget’s emphasis on energy storage aligns with the government’s broader objective of enhancing grid resilience, supporting renewable energy integration, and reducing reliance on imported battery components. By lowering entry barriers for manufacturers, policymakers aim to catalyse domestic production capacity and establish India as a competitive hub for advanced battery technologies.
In parallel, the removal of customs duty on select critical inputs used in the renewable manufacturing supply chain is expected to further strengthen the economics of integrated clean energy projects combining solar generation with energy storage.
Experts believe these measures could accelerate the rollout of utility-scale battery storage projects, improve grid reliability, and support India’s long-term decarbonisation targets. With increasing emphasis on 24/7 renewable power, BESS deployment is poised to become a cornerstone of the country’s energy transition strategy.
The Budget announcement is likely to have a positive ripple effect across renewable developers, energy storage providers, and battery manufacturers, reinforcing investor confidence and positioning India as a key emerging market in the global energy storage landscape.
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