Context: How is India planning to localize EV manufacturing?

Source: The Hindu

The Ministry of Heavy Industries released the guidelines for the Scheme to Promote Manufacturing of Electric Passenger Cars in India more than a year after it was first announced.

The main feature of the announced policy is the reduction of customs duties from the current 70–100% to 15% on the import of fully completed, ready-to-ship electric four-wheelers. The manufacturer would need to invest at least Rs. 4,150 crore over the following three years in order to achieve this.

In 2024, 70% of the world’s EV production came from China, the industry leader. The second group of worries is about the possible heightened attention being paid to four-wheeler EVs.

In FY 2025, EVs made up 7.8% of all vehicles sold, according to figures provided by FADA. Electric three-wheelers took the lead in this, followed by two-wheelers, passenger cars, and commercial vehicles.

According to the International Electric Association, India had the biggest market for electric three-wheelers worldwide in 2024. More than 80% of the electric vehicles produced domestically in 2024 were from domestic Original Equipment Manufacturers, according to the IEA’s EV Outlook. Furthermore, it estimated that less than 15% of China’s EV sales in 2024 were attributable to imports. Concerns regarding the effect on domestic industry are raised by duty reductions.

Model Question:

Discuss the challenges and opportunities in promoting Electric Vehicle (EV) manufacturing in India. Suggest a policy roadmap to make India a global EV manufacturing hub.

Model Answer:

India’s push toward Electric Vehicle (EV) manufacturing is integral to achieving its climate goals, reducing oil imports, and promoting green mobility. With the second-largest automobile market and ambitious targets, India has the potential to emerge as a global EV manufacturing hub.

Opportunities:

1. Policy Support: Schemes like FAME II, PLI for ACC Battery Storage, and Production-Linked Incentives for Auto Sector have attracted major investments.
2. Rising Demand: Increasing fuel prices, environmental awareness, and state EV policies are boosting EV adoption.
3. Skilled Manpower: India’s large engineering talent pool is an asset for R&D and innovation in EV technology.
4. Strategic Location: Proximity to ASEAN and Middle Eastern markets enhances export potential.
5. Start-up Ecosystem: Indigenous companies like Ola Electric, Ather Energy, and Tata Motors are innovating in design, software, and battery solutions.

Challenges:

1. Battery Supply Chain: Heavy dependence on imports, especially lithium and rare earths, from China and other countries.
2. High Initial Costs: EVs still remain more expensive than internal combustion engine (ICE) vehicles.
3. Inadequate Charging Infrastructure: Poor availability outside urban centers discourages widespread use.
4. Low R&D Investment: India lags behind in battery chemistry and EV component innovation.
5. Grid Readiness: The current electricity grid lacks capacity for high-volume EV integration.

Way Forward / Policy Roadmap:

1. Localize Battery Supply Chains: Invest in lithium refining and battery recycling through public-private partnerships.
2. Green Hydrogen and Alternate Chemistries: Promote sodium-ion and hydrogen fuel-cell technology.
3. Expand Charging Infrastructure: Incentivize private sector to build interoperable and fast-charging networks.
4. Skill Development: Upskill workers in EV design, battery management, and maintenance.
5. State Coordination: Harmonize central and state policies for investor clarity and infrastructure expansion.

India’s aspiration to become an EV manufacturing powerhouse requires a multipronged approach—leveraging policy incentives, fostering innovation, and building a resilient supply chain. With strategic action, India can lead the global shift toward sustainable mobility.