Cabinet approves VGF plan for grid-scale energy storage with Rs 14,500 crore support

New Delhi: The Union Cabinet Wednesday approved a viability gap funding (VGF) scheme for grid-scale energy storage systems with a total financial support of ₹14,500 crore for FY27 through FY31. The scheme will support 92 GWh energy storage capacity.

Of the total storage target, 60 GWh is hydro pumped storage while 30 GWh is battery energy storage system and 2 GWh through alternative energy storage technologies entailing a total estimated investment of ₹97,600 crore. ET earlier reported that the power ministry was working on a new VGF scheme for energy storage projects.

"The Cabinet has approved a massive ₹14,500 crore push to develop 92 GWh of energy storage capacity, supporting an estimate of almost 1 lakh crore investment!," Prime Minister Narendra Modi said on X.


India is looking to accelerate deployment of storage infrastructure to support the rising share of renewable energy in the electricity grid and manage growing peak power demand. The Cabinet also approved a scheme for providing capital expenditure support for critical mineral processing with a financial outlay of ₹2,814 crore over five years. This scheme will target processing of lithium and nickel ores and intermediary products into high purity compounds. Cobalt is also expected to be recovered as a by-product of nickel production.

"Do you feel India should depend on other countries for processing the critical minerals that power our future? I certainly don't! Lithium, nickel, cobalt...these are essential for EVs, batteries, electronics and defence," the prime minister said. "Yet, we remain heavily dependent on imports of refined materials. To address this, the Cabinet has approved a scheme to change this," he said.

The move will support sectors such as electric mobility, battery energy storage system (BESS), electronics, defence, speciality steel. Under the scheme, capital subsidy of 30% of eligible investment will be provided for setting up four critical mineral processing plants.

The maximum capital support will be capped at ₹500 crore per lithium beneficiary and ₹900 crore per nickel beneficiary, respectively. Global critical mineral processing is concentrated in a few countries, exposing supply chains to geopolitical risks and price volatility. India remains heavily reliant on imports of refined minerals such as lithium, nickel and cobalt, as domestic processing capacity is limited by high capital costs, technology constraints and raw material availability, the government said.

Modernising statistical system

The Cabinet also approved a ₹4,371.10 crore scheme to modernise the official statistical system, expand economic data coverage and integrate AI into data processing. The Viksit Bharat Initiative for Statistical Transformation, Analytics & Research (VISTAR) will run from FY27 to FY31. The scheme has three components: Comprehensive Statistical Operations and Strengthening of Ecosystem, Support for Statistical Strengthening (SSS) and Economic Census.

Under the programme, the statistics ministry plans to conduct 59 surveys during the 16th Finance Commission cycle, up from 43 previously. It will also introduce new indicators, including a Headline Index of Services Production and an Index of Unincorporated Sector Enterprises.

The initiative will promote using alternative data sources such as mobile phone, scanner and e-commerce data to supplement traditional surveys and reduce respondent burden. The scheme will provide funding to states and UTs to generate district-level gross domestic product, employment and consumption data, along with state-level industrial output estimates.