India’s operational battery energy storage manufacturing capacity is concentrated in downstream manufacturing, which accounts for 92% of the total, while cell manufacturing accounts for just 8%, according to Mercom India’s recently released Energy Storage Manufacturing Ecosystem Report.
Downstream manufacturing includes battery packs, containers, and integrated energy storage systems. The significant gap between cell and downstream manufacturing highlights India’s continued dependence on imported battery cells, materials, and specialized equipment.
The report states that India has a significant battery storage manufacturing pipeline, with substantial capacity under construction and announced. However, only 21.6% of the total identified operational and pipeline capacity is currently operational. Cell manufacturing remains at an early stage, with most identified capacity yet to become operational.
“India’s battery manufacturing industry is expanding rapidly, but domestic cell production is still at an early stage. While downstream manufacturing has grown much faster, enabling companies to assemble battery systems domestically, the industry continues to rely on imported cells and materials. A large amount of cell capacity is under construction or announced, but the real challenge will be converting that capacity into stable commercial production,” commented Raj Prabhu, CEO at Mercom Capital Group.
Existing manufacturers accounted for 47% of India’s identified manufacturing capacity across operational and planned facilities, while new entrants accounted for 53%. Lithium-based chemistries dominated capacity across cell and downstream manufacturing.
Gujarat accounted for 51% of battery storage manufacturing capacity under construction, followed by Maharashtra at 20%.
“Manufacturers will need to achieve competitive costs, consistent quality, strong yields, and sufficient utilization, and that will be much easier with a clear demand trajectory and better visibility on how quickly storage deployment will scale. India has a significant opportunity to build a competitive battery manufacturing ecosystem, but demand and supply need to develop in parallel,” added Prabhu.
Battery systems accounted for more than half of the capital expenditure (CAPEX) for utility-scale energy storage projects in the second quarter (Q2) of 2026. Cells represent a substantial share of battery system costs, making cell pricing and sourcing critical to project economics and the competitiveness of domestic manufacturers.
Government initiatives are helping expand domestic cell manufacturing. The Production Linked Incentive (PLI) program for Advanced Chemistry Cell (ACC) manufacturing has an allocation of INR 181 billion to support 50 GWh of capacity, plus an additional 5 GWh for niche technologies. Of the projects receiving active support, 6.4 GWh is operational, and 28.6 GWh under construction.
A 20% local-content requirement applies to projects supported by the Viability Gap Funding (VGF) program. However, eligible downstream components and services can meet the requirement without using domestically manufactured cells, limiting its direct effect on domestic cell demand.
“For domestic manufacturing to continue expanding, manufacturers need clear long-term visibility on storage deployment, project awards, and equipment demand before committing large amounts of capital to new cell plants. That visibility is critical to supporting capacity expansion, maintain utilization, and improve cost competitiveness. Domestic manufacturers will ultimately need to compete on cost, quality, reliability, and supply availability as more capacity comes online,” said Prabhu.
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