By Aditya Kalra

NEW DELHI Tesla has drawn up plans to make and sell battery storage systems in India and submitted a proposal to officials seeking incentives to build a factory, two people aware of the plan said, as Elon Musk continues a push to enter the country.

Tesla has been in talks about setting up a new electric vehicle (EV) factory in India to build a car priced around $24,000 for weeks, with discussions overseen directly by Prime Minister Narendra Modi. Its renewables push, however, has not been reported so far.

In recent meetings in New Delhi, Tesla proposed supporting the country's battery storage capabilities with its "Powerwall", a system that can store power from solar panels or the grid for use at night or during outages, said the sources who declined to be named as the matter is confidential.

Although Tesla sought a number of incentives to set up a battery storage factory, Indian officials conveyed these would not be available, one of the sources said. But they added that the government could help create a fair business model for the company by offering subsidies to those purchasing such products.

While both Tesla and the Indian government remain keen on the proposal, and New Delhi continues to review it, it is not certain if the plan will be realised, said the first source.

The Powerwall proposal is part of the U.S. company's plans for a broader presence in India, thinking beyond EVs, the second source said, adding Tesla was keen to find residential as well as industrial customers for its battery storage systems.

"Large policy level calibration will be required. Tesla's intent is to have the Powerwall business in India," said the source.

Neither Tesla, the Indian government's chief spokesperson nor the commerce ministry responded to requests for comment.

India has boosted electricity supplies to towns and villages but still faces peak-time shortages as demand surges. It is largely dependent on coal-based power generation as storage technologies are expensive and not yet widespread.

Last year, India faced its worst power crisis in more than six years due to coal transportation problems, while delays to adding coal and hydropower capacity have increased the risk of nighttime power cuts, when solar energy is not available.

The country is targeting an increase in non-fossil fuel power capacity to 500 GW by 2030, from 186 GW now.

POWERWALL

Tesla's Powerwall is a sleek unit around a meter high designed to be hung in a garage or outside a house.

During a 2015 visit to Tesla's California campus accompanied by Musk, Modi reviewed the product and later said he had enjoyed discussing how battery technology could help farmers.

Powerwall is aimed at domestic and light commercial use but Tesla could look at developing larger solutions for industry if the India plan comes to fruition, the second source said, without elaborating further.

Indian officials have also conveyed that Tesla will have to work on reducing the cost of its battery storage products, the first source said, adding that the government could help to unlock the market with demand expected to be high.

With incentives, Powerwall costs more than $5,500 in California, with additional costs for solar panels. It is eligible for U.S. federal tax credits and local state and utility incentives for solar and energy storage.

Powerwall users in Houston and Dallas, in a first, recently agreed to sell their surplus power back to the Texas electric grid.

(Reporting by Aditya Kalra; Additional reporting by Aditi Shah, Sarita Chaganti Singh and Sudarshan Varadhan; Editing by Kirsten Donovan)