Despite over 226GWh of cell manufacturing capacity announcements through 2035, India’s battery storage sector will remain far from self-sufficient in cell supply for at least a decade.
That’s a headline takeaway of a new report from Wood Mackenzie. The market analysis and research group noted that at present China has more than 1,000 times India’s annual cell production capacity.
The report, ‘Chasing Self-Sufficiency: Cost of Building an Indigenous Battery Storage Supply Chain in India,’ highlights that, in the near term, downstream component manufacturing will likely be the industry’s main priority, while domestic cell production at scale remains some way off.
Of the 2026 pipeline of projects tendered to date in India, which presently totals 260GWh of demand, less than 1% could be met by the 2GWh of operational battery cell production capacity.
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By contrast, China, which controls between 85% and 98% of global capacity across all components of the battery energy storage system (BESS) supply chain, currently has a cumulative annual cell production capacity of 2,695GWh.
To bridge the gap in the scaled production of components, including cathodes, anodes, separators, and electrolyte, India must fundamentally restructure its manufacturing ecosystem, according to the report.
The barriers to bringing online the 266GWh of announced capacity include execution delays—as seen in the Indian government’s Production Linked Incentive (PLI) scheme for advanced chemistry cell (ACC) battery manufacturing—challenges to financial viability, and a deep technology dependence on Chinese and South Korean companies.
These barriers put self-sufficiency between ten and 15 years away, Wood Mackenzie said.
For instance, the PLI aimed to give financial assistance to a total 50GWh of ACC production facilities to come online by 2025. However, as noted in a May Guest Blog for this site by experts at the Institute for Energy Economics and Financial Analysis (IEEFA), only a quarter of the expected investment target had been reached, and barely any facilities had been built.
The only manufacturer to successfully bring production online as of the time of the blog’s publication, Ola Electric, had inaugurated 1.4GWh of facilities, achieving just 2.8% of the PLI target.
Two-wheeled electric vehicle (EV) manufacturer Ola Electric launched its utility-scale and commercial and industrial (C&I) BESS subsidiary earlier this month. This was followed by the government’s Ministry of Heavy Industry (MHI) approving revised timelines for the manufacturing ramp-up of Ola Electric’s cell production subsidiary. Ola Electric said on 12 August that the MHI had approved extending the deadline by two years.
Ola said its annual cell production capacity now stands at 2.5GWh, a further 3.5GWh is under installation and by the end of this quarter, it will reach 6GWh. Meanwhile, the PLI funding is worth INR7.24 billion (~US$756 million), which will be paid to the company in quarterly instalments over five years.
IEEFA analysts Charith Konda and Dhruv Garg wrote in their blog that the same import dependence that affects India’s EV battery supply chain applies to BESS manufacturing. One major factor in this is India’s limited domestic processing and refining capacity of critical minerals, Konda and Garg wrote.
Wood Mackenzie’s report highlighted that, when it comes to cost of production, India does have a competitive advantage over two main non-Chinese manufacturing hubs, South Korea and Japan. Production in India is around 154% cheaper than in Japan and around 9% cheaper than in South Korea.
Nevertheless, locally manufactured cells are expected to cost between 25% and 40% more than imported components, due to India’s limited scale, higher cost of financing and a supplier ecosystem that is still undeveloped.
“India’s battery storage ambitions are credible, but the gap between policy intent and operational capacity is wide,” Wood Mackenzie director Ankita Chauhan said.
VGF domestic content rules spurring downstream investment
Downstream, the picture is a little different. Konda and Garg pointed out in their blog that Indian companies had around 60GWh of annual battery pack manufacturing capacity, which is less complex and requires less scale to be profitable than cells.
There is another powerful policy driver for downstream component makers in the BESS supply chain. At the beginning of this year, the Union Government ruled that developers of BESS projects applying for financial support through the Viability Gap Funding (VGF) incentive scheme must utilise a minimum of 20% domestic content.
The 20% threshold is low enough to ensure that projects participating in these government-backed tenders can continue using imported cells.
However, it is expected to provide impetus to companies that make downstream components. Wood Mackenzie said these could include BESS enclosures (containers), energy management systems (EMS), SCADA and battery packs over the next two to three years.
Yet getting to fully domestic content does come at a cost premium. The report models that going from 20% to 100% domestic content requirement (DCR) thresholds would add ~30% to Capex costs for a benchmark 100MW, 2-hour duration (200MWh) BESS project.
“The near-term opportunity lies in downstream components such as containers, EMS, and battery packs, where localisation is both technically feasible and commercially attractive,” Chauhan said.
“The harder work of building a self-sufficient cell industry will take a decade or more and requires sustained, targeted investment that goes well beyond the incentive schemes currently in place.”
In July, Waaree, India’s biggest solar PV module supplier in Q1 2026 according to JMK Research, opened a BESS enclosure factory, which will reach 5.15GWh annual production capacity when fully ramped.
Charlotte Gisbourne, market analyst at Solar Media’s in-house market research division, PV Tech Research, highlighted India, alongside the Middle East and Southeast Asia, as global regions that are emerging as key alternative BESS manufacturing hubs to China, in a blog published last month.
Energy Storage Summit India returns for its second annual edition at India Expo Mart, Greater Noida, 22-24 October 2026, co-located with Renewable Energy India (REI) Expo. For the full agenda and booking details, click here.
