From targets to tender execution, the ToT relaxation as a bridge policy
A massive revamp for the BESS landscape
India’s grid scale battery story is no longer just about announcing targets, it is about making tenders executable in a market where supply chains, domestic manufacturing readiness, and procurement risk do not always align. The latest inflection point is a Ministry of Power (MoP) decision that temporarily relaxes a key eligibility barrier for a specific class of bidders, those using lithium ion cell technology with Transfer of Technology (ToT) arrangements that involve countries sharing a land border with India. In effect, the government has created a narrowly scoped, time bound bridge between India’s immediate Battery Energy Storage System (BESS) procurement needs and the still evolving domestic cell manufacturing ecosystem.
This analysis explains what changed, why it matters, how it interacts with the broader BESS policy stack, and what implications it has for competition, cost discovery, and implementation quality, using only official government sources for the policy context and the ecosystem signals around storage deployment.
What changed, and why it is not a minor procedural tweak
MoP has provided a one year relaxation that allows certain bidders with ToT arrangements to participate in grid connected BESS tenders without meeting the DPIIT registration requirement that would normally apply under the post 2020 procurement restrictions for bidders linked to land border sharing countries. The policy intent is pragmatic: domestic grid scale battery manufacturing is still at an early stage, lithium ion remains the most mature and widely used technology for grid connected BESS, and near term tender pipelines require adequate competition and bankable execution capacity to avoid delays or non responsive bidding.
The move should be read as a procurement viability intervention, not a reversal of Make in India goals. It aims to prevent a situation where tender eligibility constraints outpace the availability of qualifying suppliers, which can lead to thin participation, higher tariffs, and delayed capacity addition. In the current cycle, BESS is being procured not for experimentation, but for system operations, renewable balancing, peak shifting, and reliability services.
The bigger frame, India has positioned storage as a power system resource
The most important policy context is that energy storage in India is now treated as an integral part of the power system, not as an optional add on. The Government of India has explicitly positioned BESS and pumped storage as enablers for reliable renewable integration and grid stability, and has laid out a coordinated set of policy, regulatory, and market measures over the last few years.
A MoP statement released through PIB in December 2025 highlights the direction of travel: energy storage systems are being positioned for ancillary services such as frequency control, voltage regulation, peak shifting, congestion management, and black start support, with enabling regulations, planning frameworks, and market mechanisms. It notes CEA projections of large storage requirements by 2029 to 2030 and beyond, and flags the use of tariff based competitive bidding for procurement scale up.
This matters because the ToT relaxation is not happening in isolation. It is being applied to a tendering environment that is already being pushed to scale quickly through viability gap funding and procurement standardisation.
Why the government likely felt compelled to act now
Three pressures converge.
First, procurement volumes are rising faster than operational deployment. The state has signalled the need to accelerate storage additions, but project execution and commissioning are still catching up. When deployment lags procurement ambition, tender design and bidder eligibility become critical levers to ensure that awarded capacity actually gets built.
Second, the market needs competition, but also needs capable and compliant participants. Overly restrictive eligibility can reduce competition and raise costs. Overly lax eligibility can attract speculative bidders and weaken delivery confidence. The ToT relaxation is an attempt to maintain competition without abandoning the longer term domestic manufacturing direction, by making the relaxation time bound.
Third, the policy stack is trying to solve multiple objectives at once. India is simultaneously trying to scale storage for grid operations, improve affordability through competitive bidding, enforce quality and safety norms, and build domestic manufacturing capability. These objectives can collide in the short term. The ToT waiver is a short term compromise to avoid procurement paralysis while domestic capacity ramps.
How this interacts with India’s BESS support architecture
The ToT relaxation sits alongside a broader architecture that already includes public support and market enablers.
VGF as a deployment accelerator. The MoP has been implementing Viability Gap Funding schemes to catalyse early deployment. The PIB note referenced above states that the government is implementing two VGF schemes to support development of around 43 GWh of BESS, launched in March 2024 and June 2025.
Official operational guidelines for VGF BESS. The MNRE’s Energy Storage Systems policies and guidelines page hosts the MoP operational guidelines for the VGF scheme for BESS, and for the state component under the same scheme. This is important because tender eligibility, technical requirements, and procurement structures often draw from these guideline documents.
Market integration measures. The same PIB note also flags that storage is eligible to provide secondary and tertiary reserves under CERC ancillary services regulations, and that electricity supplied from BESS can participate in the High Price Day Ahead Market. These measures expand revenue stack potential and improve bankability over time, though much depends on implementation details and market depth.
In this context, the ToT relaxation is best understood as a procurement continuity measure that keeps the VGF and tendering pipeline moving while the domestic supply side matures.
Implications for competition and tariff discovery
The most immediate impact is on bidder participation. By allowing a specific bidder class to participate for one year, tenders are likely to see broader competition, which can improve price discovery and reduce the risk of under-subscribed bidding. However, the effect is not mechanically positive. If the relaxation increases participation from entities with weak execution capability, it can introduce downstream implementation risk, including delays, contract renegotiations, or performance shortfalls.
That is why the government’s parallel emphasis on safety and technical standards becomes relevant. The PIB note flags that draft CEA regulations and technical standards for construction of BESS have been issued to enhance safety and standardise design and construction practices. This is a signal that the government expects scale to come with discipline, not with a race to the bottom.
Implications for domestic manufacturing and policy credibility
The ToT waiver will be judged on whether it is truly temporary and whether it is paired with tangible domestic capability building. The policy rationale acknowledges that domestic grid scale battery manufacturing remains nascent. In a transition phase, ToT can be a pathway to capability creation, but only if contracts, localisation requirements, and supply chain commitments are structured to translate knowledge transfer into domestic value addition.
Official policy signals already indicate that India wants manufacturing scale. The PIB note highlights the Production Linked Incentive scheme for Advanced Chemistry Cell manufacturing capacity, including an earmark for grid scale storage, as part of the supply side measures.
So the credibility test is whether the one year relaxation is used to avoid procurement disruption while the manufacturing ecosystem catches up, rather than becoming a recurring workaround that delays domestic readiness.
What discoms and procurers should do differently in tenders now
The relaxation increases the need for procurement rigor, not less.
Strengthen technical eligibility and performance guarantees. A wider bidder pool should come with clear qualification thresholds, milestone linked guarantees, and strict performance testing and availability norms.
Hardwire safety and compliance. As BESS scales into hotter climates and denser grid nodes, safety governance becomes a system risk issue. Alignment with CEA technical standards and safety frameworks should become non-negotiable.
Design for delivery, not just lowest quote. If tariffs become aggressively low, the risk of underbuilt quality and short cycle life increases. Tender evaluation should incorporate delivery credibility and lifecycle value, within the bounds of competitive procurement rules.
What to watch over the next year
There are four practical indicators to track.
- Whether bid participation increases materially in upcoming BESS tenders, and whether awarded projects reach financial close and commissioning on schedule.
- Whether tendering agencies tighten technical and safety requirements in parallel, consistent with the draft CEA direction referenced in official statements.
- Whether domestic cell and system manufacturing capacity shows measurable ramp, aligning with the official manufacturing push and VGF scale up.
- Whether the government extends, narrows, or ends the ToT relaxation at the one year mark, which will signal whether domestic capability has caught up to procurement ambition.
The policy message is clear: storage is essential for a reliable renewables heavy grid, and India wants fast scale. The ToT relaxation is a short term procurement bridge, but its success will depend on whether it improves tender competitiveness without undermining delivery quality, safety discipline, or domestic manufacturing momentum.