Cabinet clears Rs 14,500 crore for battery and hydro storage, and aid for lithium plants

The Union Cabinet on Wednesday approved Rs 14,500 crore in viability gap funding to help build 92 gigawatt-hours of grid-scale energy storage by 2030-31, and a separate Rs 2,814 crore scheme to subsidise India's first large lithium and nickel processing plants. Both schemes are meant to reduce India's reliance on imported batteries and battery materials, most of which come from China.

The storage scheme will support 60 GWh of pumped hydro storage, 30 GWh of battery storage and 2 GWh of newer technologies, with total investment estimated at Rs 97,600 crore, the government said in a release issued through the Press Information Bureau. Battery projects that get support must use at least 40% domestic content.

The storage scheme

Grid-scale storage lets power companies store cheap solar and wind electricity during the day and release it in the evening peak, when demand is highest and renewable output falls. The government said the 92 GWh it will support is equal to 170% of India's present grid-scale storage capacity, and would help reach the 411 GWh the country needs by 2031-32.

Capacity will be awarded through tariff-based competitive bidding. Public and private electricity distribution companies can get the funding for battery and pumped storage projects, the release said; projects using other technologies can be built by public or private firms. The money covers 2026-27 to 2030-31. Information and Broadcasting Minister Ashwini Vaishnaw, who briefed reporters, said the capacity would be distributed fairly across states and built with them, according to News On AIR.

The release did not say how much support each gigawatt-hour would get, or when the first auctions will be held.

Lithium and nickel processing

The second scheme offers a 30% capital subsidy for four processing plants: two to turn lithium ores or intermediate products into high-purity compounds, each with a capacity of at least 30,000 tonnes, and two for nickel, each of at least 50,000 tonnes. Cobalt is expected to be recovered as a by-product of nickel. Support is capped at Rs 500 crore for each lithium plant and Rs 900 crore for each nickel plant, and will be paid in three instalments linked to milestones. Bidders that pass a technical test will be ranked by the lowest subsidy they ask for.

The Cabinet said processing of these minerals "remains geographically concentrated in a few global locations", which exposes supply chains to "geopolitical disruptions, price volatility, and potential supply restrictions". It said India "remains substantially dependent on imports for refined intermediates and high-purity materials".

The China question

The government's releases do not name a country. The International Energy Agency's Global Critical Minerals Outlook 2025 found that China refines about 70% of the world's lithium chemicals and produced about 80% of the world's battery cells in 2024, as well as 98% of one main cathode type (lithium iron phosphate) and more than 90% of anode material.

That dependence carries a practical risk for India. China has used export licensing on critical materials and equipment, including rare earths and, from 18 November, tunnel-boring machines. Its suspension of a wider package of rare-earth controls announced in October 2025 runs until 10 November 2026 under the commerce ministry's Announcement No. 70 of 2025, as the law firm Pillsbury has noted. Commerce and Industry Minister Piyush Goyal said on Tuesday that India "did not go begging" when China restricted rare earths.

The 40% domestic content rule means battery projects can still import most of their parts, Whether domestic makers can supply enough cells at competitive prices will decide how far the scheme actually cuts imports.

Bengal

West Bengal already runs one of India's larger pumped storage stations, the 900 MW Purulia plant operated by the state power utility WBSEDCL, and the utility is preparing a second 1,000 MW closed-loop project at Turga in the same district, according to its own project documents. The scheme does not name projects, and it is not yet known which states' projects will win support.

What happens next

The power ministry is expected to issue scheme guidelines and bidding rules for storage, and the mines ministry for the processing plants. Neither release gave dates.