The Ministry of Finance has settled a classification issue that had been raising import costs for India’s battery storage sector. Through Circular No. 45/2026-Customs dated 9 October 2026, the Central Board of Indirect Taxes and Customs (CBIC) has clarified that stationary, grid-scale and industrial lithium-ion Battery Energy Storage Systems (BESS) are eligible for the concessional Basic Customs Duty (BCD) rate of 10 per cent, and cannot be assessed at the higher tariff rate by treating them as “power banks”.
The circular, issued by the Tax Research Unit of the Department of Revenue, is addressed to all Principal Chief Commissioners and Chief Commissioners of Customs and to Directors General under CBIC, so that a uniform approach is followed at ports across the country.
The Duty Framework
Lithium-ion accumulators are classified under tariff item 8507 60 00 of the Customs Tariff, which carries a tariff rate of 20 per cent. Serial No. 325 of Table I of Notification No. 45/2025-Customs dated 24 October 2025, corresponding to Serial No. 528C of the earlier Notification No. 50/2017-Customs dated 30 June 2017, reduces this to an effective rate of 10 per cent.
The concession carries three exclusions: battery packs for use in the manufacture of electrically operated or hybrid vehicles, lithium-ion batteries or battery packs of cellular mobile phones, and power banks. Goods in these categories do not qualify under this entry.
Why the Clarification Was Needed
According to the circular, the Board found that customs field formations were following divergent assessment practices for BESS falling under tariff item 8507 60 00. Some formations were treating stationary, grid-scale and industrial systems as power banks, placing them within the exclusion and denying the 10 per cent rate. Such consignments were consequently exposed to the 20 per cent tariff rate, doubling the basic duty incidence on equipment that accounts for a large share of a storage project’s capital cost.
Since the notification did not define the term “power bank”, its interpretation varied between ports, creating uncertainty for developers, EPC contractors and system integrators importing containerised battery systems.
What CBIC Has Clarified
The circular states that, for the purpose of the said entry, the term “power bank” applies only to lithium-ion battery devices with charging and discharging ports designed for use as an external charging device for cellular mobile phones or portable electronic devices.
Accordingly, stationary, grid-scale and industrial lithium-ion BESS falling under tariff item 8507 60 00 are outside the power bank exclusion, and field formations cannot deny them the concessional rate on that basis. Consumer power banks remain excluded from the concession.
Implications for the Storage Sector
The clarification comes as India’s BESS pipeline expands rapidly. The National Electricity Plan (Generation), cited by the Ministry of Power in a Rajya Sabha reply on 27 July 2026, projects a BESS requirement of 8.68 GW/34 GWh by 2026-27, rising to 47.24 GW/236 GWh by 2031-32, with an estimated investment of ₹3.49 lakh crore for battery storage alone.
A significant part of this capacity is being developed under government support schemes. The Viability Gap Funding (VGF) scheme approved by the Union Cabinet in September 2023 carries an initial outlay of about ₹9,400 crore, including budgetary support of ₹3,760 crore. A second VGF scheme issued in June 2025 provides ₹5,400 crore from the Power System Development Fund (PSDF) to support 30 GWh of BESS at ₹18 lakh per MWh, with 25 GWh allocated to 15 states and 5 GWh to NTPC.
Projects under these schemes are bid on competitive tariffs with strict timelines; PSDF-supported projects must be commissioned within 18 months of signing the storage purchase agreement. A uniform 10 per cent duty removes a cost variable that bidders could not price with confidence and lowers the risk of assessment disputes holding up equipment clearance at ports.
Alignment with Domestic Manufacturing Policy
The import concession operates alongside measures aimed at building domestic cell manufacturing. Under the Union Budget 2026-27, Notification No. 01/2026-Customs extended the BCD exemption on capital goods for manufacturing lithium-ion cells, previously limited to cells for electrically operated vehicles, to cover batteries of BESS, with effect from 2 February 2026.
Together, a moderate duty on finished storage systems and duty-free capital equipment for cell plants support near-term deployment through imports while encouraging the creation of local manufacturing capacity.
Points for Importers
The circular is interpretive and does not alter the duty rate itself. Importers should note the following:
- The 10 per cent rate applies only where the goods are correctly classified under tariff item 8507 60 00.
- Battery packs for EV or hybrid vehicle manufacture, mobile phone batteries and portable power banks remain outside this entry.
- Other levies applicable at the time of import continue to apply as per the relevant notifications.
Conclusion
By limiting the term “power bank” to portable consumer charging devices, CBIC has removed an ambiguity that was adding cost and uncertainty to utility-scale storage imports. With several gigawatt-hours of VGF-supported capacity due for commissioning over the next two years, consistent assessment at ports should help developers keep project costs and timelines on track.
Official Sources
- CBIC, Ministry of Finance – Circular No. 45/2026-Customs dated 9 October 2026 – https://taxinformation.cbic.gov.in/view-pdf/1003347/ENG/Circulars
- CBIC Tax Information Portal – Notification No. 45/2025-Customs dated 24 October 2025 – https://taxinformation.cbic.gov.in/
- Ministry of Finance, Union Budget 2026-27 – Notification No. 01/2026-Customs – https://www.indiabudget.gov.in/doc/cen/cus0126.pdf
- Ministry of Finance, Union Budget 2026-27 – Explanatory notes on customs duty changes – https://www.indiabudget.gov.in/doc/cen/dojstru1.pdf
- PIB – Cabinet approves VGF Scheme for Battery Energy Storage Systems (September 2023) – https://pib.gov.in/PressReleasePage.aspx?PRID=1955112
- MNRE – VGF Scheme for BESS supported through PSDF (June 2025) – https://mnre.gov.in/en/document/viability-gap-funding-vgf-scheme-for-development-of-battery-energy-storage-systems-bess-supported-through-power-system-development-fund-psdf/
- PIB, Ministry of Power – Rajya Sabha reply on energy storage requirement (27 July 2026) – https://pib.gov.in/PressReleasePage.aspx?PRID=2290015
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