India’s Battery Energy Storage System (BESS) sector is projected to grow at a compound annual growth rate (CAGR) of 91% between FY26 and FY32, with cumulative installed capacity expected to increase from 6.3 GWh to 302 GWh, according to a report by Nuvama. The projected expansion highlights the growing importance of battery storage in integrating renewable energy, balancing the power grid and meeting round-the-clock electricity demand.
The report estimates that annual BESS capacity additions will rise from 5.7 GWh in FY26 to 56 GWh by FY32. Meanwhile, the Central Electricity Authority (CEA) estimates India’s battery storage requirements at 236 GWh by FY32 and 1,840 GWh by 2047, indicating substantial long-term demand for energy storage infrastructure.
BESS Capacity Expansion to Accelerate Through FY32
According to Nuvama, India’s BESS market is entering a significant infrastructure investment cycle as the country expands its renewable energy capacity and seeks more reliable electricity supply.
Battery storage systems can store electricity generated during periods of high renewable output and release it when demand increases or generation falls. This capability is particularly important for managing the intermittent nature of solar and wind power.
Nuvama estimates that cumulative BESS capacity will reach 302 GWh by FY32, compared with 6.3 GWh in FY26. The projected 91% CAGR reflects the expected acceleration in installations over the period.
The report also highlighted India’s dependence on imported battery components. Around 89% of current requirements are reportedly met through imports, leaving considerable scope for domestic manufacturing and localisation.
Import Dependence Creates Opportunities for Domestic Manufacturing
Nuvama said falling battery costs and the potential introduction of an Approved List of Models and Manufacturers (ALMM)-like framework could support wider adoption and encourage domestic production.
The brokerage noted that lithium-ion technology currently accounts for approximately 98% of the BESS market. However, sodium-ion technology could offer additional opportunities as India seeks to diversify its battery technology ecosystem.
The report also identified the China+1 strategy as a potential growth opportunity. As companies diversify supply chains, Indian manufacturers could benefit from efforts to establish alternative production bases and strengthen local battery supply chains.
Policy support, improved manufacturing scale and lower production costs could help domestic companies capture a greater share of the expanding market.
Cell-to-Pack Manufacturing Offers Higher Margin Potential
Nuvama’s analysis indicates that manufacturing economics vary considerably across BESS end-markets.
Commercial, industrial and retail segments offer estimated spreads of USD 18–23 per kilowatt-hour, corresponding to EBITDA margins of 17–20%. The utility segment has a lower estimated spread of USD 8 per kWh and an EBITDA margin of 9%.
Despite the lower margins in the utility segment, the report said its calculations and channel checks indicate a potential payback period of one to two years.
Cell-to-pack manufacturing, which involves integrating battery cells directly into packs with fewer intermediate components, could offer more attractive economics under suitable operating conditions.
Nuvama estimates that cell-to-pack configurations could generate an internal rate of return (IRR) of 31%, significantly higher than the 12% estimated for an integrated BESS facility.
Domestic Production Gains Support From Incentives and Cost Advantages
The report highlighted India’s potential cost advantages in battery manufacturing, including competitive labour expenses and government support.
According to Nuvama, an integrated BESS manufacturing facility could require capital expenditure of approximately USD 80 million per GWh. The report also cited production-linked incentive support of ₹181 billion for 50 GWh of capacity.
Such incentives could help reduce the initial financial burden on manufacturers and encourage investment in domestic battery production.
Nuvama believes that policy support, localisation and economies of scale could eventually allow integrated BESS manufacturers to pursue export-led growth.
However, the commercial viability of individual projects will depend on capital costs, technology choices, production volumes, customer demand and the ability to compete with imported products.
Premier Energies and Vikram Solar Could Benefit From BESS Growth
The brokerage expects battery storage integration to become a meaningful revenue contributor for listed solar and BESS companies by FY28.
According to the report, BESS could account for an estimated 17–60% of company revenues by FY28, depending on the company and its exposure to the segment.
Premier Energies represents a potential opportunity of ₹103 billion, equivalent to 60% of its projected FY28 revenue. Vikram Solar could see a 54% revenue uplift from BESS-related opportunities, according to Nuvama’s estimates.
The brokerage cautioned that despite early battery ambitions, earnings across most listed solar and BESS companies have yet to reflect a substantial contribution from the segment.
As manufacturing capacity increases and projects move towards commercialisation, BESS could become an important source of incremental revenue and earnings growth.
These estimates represent projections rather than guaranteed outcomes and will depend on execution, project commissioning, demand and pricing conditions.
Valuations Could Re-rate as BESS Contributions Increase
Nuvama also highlighted a valuation gap between solar and BESS companies and businesses operating in battery chemicals and battery independent power production (IPP).
According to the report, solar and BESS stocks were trading at approximately 17 times estimated FY27 earnings per share (EPS), representing a 77% discount to battery chemicals companies and a 64% discount to battery IPP peers.
The brokerage believes that as battery storage capacity ramps up and earnings contributions become more visible, the sector could see earnings upgrades and potential valuation re-rating.
However, valuation differences between sectors may also reflect differences in business models, profitability, execution risks and growth expectations. Any re-rating will depend on companies delivering the projected growth and converting announced opportunities into sustainable earnings.
India’s BESS Market Faces a Major Growth Opportunity
India’s battery energy storage industry is positioned for rapid expansion as renewable energy integration, grid balancing requirements and demand for reliable electricity increase.
Nuvama’s projections point to substantial growth in installations, domestic manufacturing opportunities and potential revenue contributions for listed solar and battery storage companies.
Falling battery costs, localisation initiatives, government incentives and alternative technologies could strengthen India’s position in the sector. At the same time, import dependence, capital requirements, manufacturing economics and project execution remain important considerations.
If the projected capacity expansion materialises, BESS could emerge as a significant component of India’s energy infrastructure and a growing contributor to the earnings of companies operating across the solar and battery value chain.
