India’s Battery Energy Storage System (BESS) sector is projected to register a compound annual growth rate (CAGR) of 91 per cent between FY26 and FY32E, according to a recent report by Nuvama. The expansion reflects a critical infrastructure cycle designed to support renewable integration, grid balancing, and round-the-clock power requirements across the country.
The report noted that cumulative capacity will surge from 6.3GWh to 302GWh over the same period, with annual additions climbing from 5.7GWh in FY26 to 56GWh by FY32E. The report mentioned that Central Electricity Authority (CEA) estimates national BESS demand at 236GWh by FY32 and 1,840GWh by 2047.
“We estimate annual BESS additions to rise from 5.7GWh in FY26 to 56GWh by FY32E, taking cumulative capacity from 6.3GWh to 302GWh (91 per cent CAGR) over FY26-32E,” the report said.
“With 89 per cent of current requirements met through imports, falling battery costs, alongside likely ALMM-like framework, could accelerate adoption, localisation and domestic capacity growth. Although Li-ion occupies 98 per cent of the BESS market, sodium-ion technology and China+1 themes are an opportunity for India,” the report added.
Manufacturing economics reveal distinct margins across end-markets, with commercial, industrial, and retail segments yielding spreads of $18 to $23 per kilowatt-hour, corresponding to EBITDA margins of 17 to 20 per cent. By contrast, the utility segment records spreads of $8 per kilowatt-hour and an EBITDA margin of 9 per cent.
“Our analysis shows attractive cell-to-pack manufacturing economics with materially differentiated spreads across end-markets,” the report noted. “Even with low spreads of $8/kWh (EBITDA margin 9 per cent) for the Utility segment, our calculation and channel checks indicate one-two year payback.”
The report also highlighted that while returns for an integrated BESS facility yield a modest internal rate of return of 12 per cent, domestic production maintains a distinct cost advantage through capital expenditure of $80 million per gigawatt-hour, coupled with production-linked incentive support of ₹18,100 crore for 50GWh and competitive labour expenses. Cell-to-pack configurations demonstrate an internal rate of return of 31 per cent.
“We believe with policy support, localisation and scale, integrated BESS could open up export-led growth,” the report noted.
Financially, BESS integration is estimated to contribute 17 to 60 per cent to company revenues by FY28. Premier presents an opportunity of ₹10,300 crore, representing 60 per cent of its projected FY28 revenue, while Vikram is positioned for a 54 per cent revenue uplift.
“Despite early battery ambitions and potential BESS addition of 17–60 per cent to FY28E revenue, most listed solar/BESS players’ earnings are yet to capture meaningful BESS contribution,” the report stated.
“At 17x FY27E EPS, solar/BESS trades at 77 per cent discount to battery chemicals and 64 per cent discount to battery IPP peers. As capacity ramps up, we believe BESS could emerge as a strong driver of earnings upgrade and valuation re-rating,” the report said.
Published on October 12, 2026
