According to apacnewsnetwork.com, India’s domestic battery manufacturing capacity accounts for less than 1% of an estimated 260 GWh demand pipeline from competitive tenders in 2026, leaving the country heavily reliant on imports despite accelerating policy support for energy storage — per new research by Wood Mackenzie.
Massive Demand–Supply Gap Persists
The report, titled Chasing Self-Sufficiency: Cost of Building an Indigenous Battery Storage Supply Chain in India, underscores a profound structural imbalance. While more than 226 GWh of cell manufacturing capacity has been announced for construction through 2035, actual commissioned capacity stood at just 2 GWh in 2026. This compares starkly with China’s 2,695 GWh of operational capacity in the same year. Execution delays, weak project economics, and persistent dependence on Chinese and South Korean technology licensors collectively extend the timeline for global competitiveness to 10 to 15 years.
China dominates upstream segments critical to battery production: it controls between 85% and 98% of global capacity for cathodes, anodes, separators, and electrolytes. That concentration severely constrains India’s ability to localize core inputs — even as national ambitions intensify. The gap is not aspirational but operational: policy intent has outpaced infrastructure, supply chain readiness, and financial viability in equal measure.
Wood Mackenzie’s analysis confirms that only four companies had commissioned gigafactories in India as of 2026, while numerous other projects remained in planning or early-production phases. Financial sustainability remains elusive: a 5 GWh facility operates at an EBITDA margin of approximately −10%, with breakeven projected only at ~10 GWh. Consistently positive margins require capacity of at least 20 GWh — a scale yet unattained domestically.
Downstream Localization Offers Near-Term Pathway
Given these constraints, Wood Mackenzie identifies downstream segments as India’s most viable near-term opportunity. Localisation efforts over the next two to three years are expected to prioritize containers, energy management systems (EMS), SCADA systems, and battery packs — areas where technical feasibility and commercial attractiveness align. This shift is actively supported by policy: new grid-scale battery energy storage system (BESS) tenders now enforce a 20% domestic content requirement.
The economic implications of scaling local content are quantified precisely. Wood Mackenzie estimates that raising domestic content requirements from below 20% to 100% would increase total capital expenditure by approximately 30% for a benchmark 100 MW, two-hour BESS project. That cost premium reflects both immature local manufacturing and fragmented supplier networks — not inherent inefficiency.
Local cells remain significantly more expensive than imported alternatives. According to the report, locally manufactured cells are expected to cost 25% to 40% more, driven primarily by limited production scale, higher financing costs, and an underdeveloped domestic supplier ecosystem. Yet this cost disadvantage coexists with a globally competitive underlying position: India holds a 154% cost advantage over Japan and a 9% advantage over South Korea — making it the second-most competitive major manufacturing destination after China.
Execution Gap Over Technology Gap
“India’s battery storage ambitions are credible, but the gap between policy intent and operational capacity is wide,” said Ankita Chauhan, director at Wood Mackenzie. She emphasized that the immediate opportunity lies not in replicating full-cell gigafactories, but in building capabilities where localisation is already technically feasible and commercially rational — particularly in integration, control systems, and packaging.
“India’s cost position is genuinely competitive in a global context, and that matters as supply-chain diversification becomes a strategic imperative,” said Priya Shrivastava, senior research analyst at Wood Mackenzie. “The challenge is closing the execution gap fast enough to capture that opportunity before other emerging manufacturing hubs do.”
Cell production will initially rely on imported inputs over the next two to five years, while establishing domestic refining capabilities — essential for raw material sovereignty — could take more than a decade. Most manufacturers continue to depend on Chinese or South Korean technology licences, limiting their control over core IP, pricing structures, and vertical integration. That dependency reinforces the urgency of building indigenous engineering capacity — not just manufacturing throughput.
Source: apacnewsnetwork.com
Compiled from international media by the SCI.AI editorial team.
