Ministry of Power Mandates 20 Percent Local Content for BESS Projects Under VGF Scheme
The Ministry of Power has mandated a minimum 20 percent local content, including indigenously developed EMS software, for BESS projects implemented under the VGF Scheme supported through the PSDF, as a prerequisite for fund disbursement.
December 26, 2025. By Mrinmoy Dey
The requirement, which also includes an indigenously developed Energy Management System (EMS) application software, will be applied for the purpose of PSDF fund disbursement, the Ministry of Power said in a notification.
The ministry noted that BESS is not currently included in the list of power sector items notified for exclusive procurement from Class-I local suppliers under the Public Procurement (Preference to Make in India) framework, and hence both Class-I and Class-II local suppliers are eligible to participate.
However, following an amendment to the VGF Guidelines in August 2025, indigenous EMS development has been mandated for all BESS capacity rolled out under the scheme.
States that have already floated tenders without specifying local content may continue with the procurement process after obtaining an undertaking from bidders committing to meet the 20 percent local content threshold, the notification clarified.
The directive follows requests from several states seeking exemption from PPP-MII provisions for BESS projects. “Some beneficiary States have stated that, during the meeting of the PSDF Techno-Economic Sub-Group (TSEG), they were advised to approach the Ministry of Power for seeking exemption,” it said.
The measure is aimed at reinforcing domestic capability, supporting indigenous technology development, and strengthening India’s clean energy infrastructure as grid-scale storage deployment accelerates.
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