BESS emerges as a core building block of a flexible power system

As renewable capacity expands rapidly, the timely development of transmission infrastructure and grid modernisation becomes increasingly important.

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India’s growth story over the next two decades will be closely tied to how effectively we shape our energy landscape.

As we pursue our goals of becoming a developed economy and meeting net-zero commitments, we must build an energy system that is reliable, affordable and resilient.

The Union Budget 2026 adopts a balanced, forward-looking approach to this challenge. The government recognises that clean energy transition, infrastructure financing and domestic manufacturing are deeply interconnected, and that policy must move on all three fronts simultaneously.

Making storage central to grid reliability

Battery Energy Storage Systems (BESS) have emerged as a core building block of a flexible power system. Policy support for BESS directly addresses a key challenge for India: maintaining grid reliability while rapidly increasing the share of variable renewable energy.

The government's extension of customs duty exemptions on capital goods used for lithium-ion cells to include BESS is a timely intervention. It lowers upfront project costs at a stage when both developers and financiers are still getting comfortable with storage business models. Given that storage projects are capital-intensive and rely on long-term revenue certainty, even marginal reductions in capital cost significantly improve bankability and ease financing closure.