Sunday | Mar 30 2025 | 02:18:46 AM
The market for electric vehicles (EVs) in India has been experiencing impressive growth, with EV sales surpassing two million units in the calendar year 2024. This pace of growth aligns well with the government’s ambitious goal of having 80 million EVs on Indian roads by 2030, prompting the industry to prepare for this anticipated rise in demand. In light of the myriad developments in the sector, a key focus area of the government is to establish a self-reliant EV ecosystem within the country through the ‘Make in India’ initiative. The objective is to promote domestic manufacturing and reduce the country’s dependency on imports, which would help drive increased growth of the market.
At present, India relies heavily on Chinese imports for crucial components such as lithium-ion batteries, electric motors and others, which are essential for EV manufacturing. As per a report, over 70 per cent of lithium-ion batteries are currently being sourced from China. This is because critical minerals such as lithium, cobalt, nickel, etc which are essential for EV battery production are not abundantly available in India, with about 70 per cent of them being processed by Chinese companies. Procuring these minerals from China had implied high costs, which further hampered prospects of local battery production.
Leading EV manufacturers have already noted an increasing proportion of Chinese imports in their total material expenditures, giving rise to multiple concerns regarding supply chain security and dependence on a single country for critical technology. Indeed, any disruptions in the availability of these components in future could lead to production delays and increased costs for EV manufacturers. This, in turn, could slow down the pace of EV adoption in the country and hinder its ability to meet its climate goals. At this critical juncture where Indian EV industry stands today, there is an urgent need to diversify and de-risk the supply chain to ensure security and uninterrupted growth.
Moreover, it is important to note that the demand for EVs is likely to skyrocket over the coming years. To fulfil this increasing demand efficiently, the need for a secure and sustainable supply of minerals and components is more critical than ever. Government and industry stakeholders are working together to address this challenge and strengthen India’s domestic capabilities in designing and developing essential EV components. A host of initiatives are being undertaken to support this vision, including the recent exemption of critical minerals from basic customs duty. This strategic move will enable manufacturers to secure these minerals cost-effectively and thus lower the overall domestic battery manufacturing costs. Domestically produced lithium-ion cells could potentially be up to 50 per cent cheaper than their Chinese counterparts, due to lower labour costs involved, production efficiencies and support through government subsidies. The reduction of import duties on essential battery production equipment is another positive step in this direction.
Further, recognising the need to drive innovation and technology advancements in the EV sector, the government has also allocated approximately $1.7 billion over five years to support the development of indigenous technology within the EV industry. Partnerships with various research institutions are underway to develop local battery technologies and production capabilities. Investments in R&D for advanced EV battery technologies, such as sodium-ion and solid-state batteries, are also being carried out to drive innovation and thus accelerate the adoption of electric vehicles on a global scale. Notably, the government’s PLI scheme has spearheaded the expansion of manufacturing facilities for Advanced Chemistry Cells (ACC), paving the way for a thriving domestic industry for advanced battery technologies. This initiative has also attracted numerous companies to set up manufacturing plants in the country, thereby laying the foundation for a self-sufficient supply chain and reducing India’s reliance on imported battery cells.
By strengthening its domestic manufacturing capabilities, India has the potential to generate multiple job opportunities for its workforce, particularly in the manufacturing and engineering sectors. This influx of jobs can help alleviate unemployment rates and contribute to the overall socio-economic development of the country. However, this growth also necessitates specialised knowledge, skills and expertise. Therefore, it is imperative for the government to prioritise workforce development by investing in robust skilling and training programs. Creating a workforce with the necessary expertise for EV production could also facilitate technology transfer and collaboration between domestic and international players.
As per the Economic Survey 2024-25, future EV policies must expand their scope to meet the evolving needs of the industry. India has already made significant progress with the ‘Make in India’ initiative, setting the stage for increased production capacity. By positioning itself as a key player in EV manufacturing, India can capitalise on this growing market and attract investments from both domestic and international stakeholders. This influx of capital can further stimulate economic development, create wealth, and enhance the country's competitiveness in the global EV market. The possibilities are limitless, but the vision is one – building a clean, green India for one and all to thrive.
The above article has been written by Yogesh Bhatia, Managing Director & CEO of LML.
