India's Union Cabinet on Wednesday approved 145 billion rupees (14,500 crore rupees) of viability gap funding to help build 92 gigawatt-hours of grid-scale energy storage, and said battery projects backed by the money must source at least 40% of their content in India.

The support runs over the five fiscal years from 2026-27 to 2030-31 and is meant to draw an estimated 976 billion rupees of investment, the government said. For battery suppliers across Asia, the local-content rule may matter more than the headline sum. Grid-scale battery projects in new Indian tenders currently carry a 20% domestic content requirement, according to Wood Mackenzie, and Indian factories supply less than 1% of the battery demand in this year's tenders.

What India's 92 GWh storage plan pays for

Of the 92 GWh, 60 GWh is set aside for pumped hydro storage, 30 GWh for battery energy storage systems and 2 GWh for alternative storage technologies, according to the government's announcement. The subsidy equals about 15% of the estimated investment.

Capacity will be awarded through tariff-based competitive bidding. Public and private electricity distribution companies can claim the funding for battery and pumped hydro projects, while state-owned and private companies can build the alternative-technology portion. The government said the new capacity would equal 170% of India's current grid-scale storage, and it put the country's requirement at 411 GWh by the 2031-32 fiscal year.

The package is far larger than the previous round. In June 2025 the government set aside 54 billion rupees to support 30 GWh of batteries, on top of an existing incentive of about 37 billion rupees covering 13.2 GWh, Business Standard reported at the time. That tranche was to be funded from the Power System Development Fund, with 25 GWh allotted to 15 states and 5 GWh to state-run generator NTPC.

A 40% local content rule for battery makers

The government said the domestic content requirement for battery projects is meant to reduce dependence on imported components and complement existing supply-side incentives for battery manufacturing.

Meeting it will be hard. Domestic manufacturing accounts for less than 1% of a roughly 260 GWh battery demand pipeline from competitive tenders this year, Wood Mackenzie said in an August report. India had just 2 GWh of commissioned cell manufacturing capacity in 2026, against China's cumulative 2,695 GWh, and China controls between 85% and 98% of global capacity in every major component from cathodes to electrolyte, the consultancy said.

Wood Mackenzie expects locally made cells to cost 25% to 40% more than imported ones. It estimated that raising domestic content from under 20% to 100% would add about 30% to the capital cost of a benchmark 100-megawatt, two-hour battery project. India's would-be cell makers depend heavily on Chinese and Korean technology licensors, it said, and the nearest-term opening for local suppliers lies in downstream parts such as containers, energy management systems and battery packs. Ankita Chauhan, a director at the firm, said "the gap between policy intent and operational capacity is wide."

A 40% floor still leaves up to 60% of a project's content open to imports, which matters for the region's cell makers as they chase storage orders. South Korea's Samsung SDI said it had won more than 60 GWh of U.S. energy storage orders this year. In China, a smaller export tax rebate on batteries and a reinstated consumption tax have squeezed margins at CATL, the world's largest battery maker.

The cabinet also approved a 28.14 billion rupee capital subsidy for critical mineral processing on Wednesday. It will pay 30% of eligible investment in four plants: two lithium processors with a minimum capacity of 30,000 metric tons each and two nickel processors of at least 50,000 tons each, with cobalt expected as a by-product of the nickel plants. Support is capped at 5 billion rupees per lithium project and 9 billion rupees per nickel project, and winners will be chosen by the lowest subsidy sought.

Power demand climbs as NTPC expands

The storage push comes as Indian electricity use rises quickly. Power consumption grew 21.88% from a year earlier to 159.76 billion kilowatt-hours in October, and peak demand reached 260.73 GW, up from 210.82 GW in October 2025, The Economic Times reported. Peak demand hit a record 270.82 GW in May.

NTPC, the country's largest power producer, plans to lift installed capacity to 149 GW by 2032 from 91 GW now, Chairman Gurdeep Singh said on Tuesday. He said about 30 GW of the 250 GW the company targets for 2037 is planned to come from nuclear power.

Renewable energy minister Pralhad Joshi said on Tuesday that the spread of artificial intelligence would make access to affordable, reliable and clean electricity more important for economies.

The subsidy approved on Wednesday covers 92 GWh. The government's own estimate of what the grid will need by 2031-32 is 411 GWh, nearly four and a half times as much.