India’s electric mobility journey has reached a critical inflection point. Adoption is accelerating, manufacturing capacity is expanding, and policy intent has been consistent. However, the next phase of EV growth will not be defined by headline adoption numbers alone. It will be shaped by how resilient, self-reliant, and value retentive the underlying manufacturing ecosystem becomes.
Flagship interventions such as FAME and the Production Linked Incentive (PLI) schemes have played a decisive role in driving EV penetration and domestic manufacturing. Much of this policy focus, however, has remained concentrated on vehicles, batteries, and power electronics. One of the most critical and cost determining components of an electric vehicle, the motor continues to sit outside formal fiscal prioritisation.
As a result, India’s EV industry remains heavily dependent on imported rare earth permanent magnet motors. This exposes OEMs and fleet operators to volatile input costs and supply disruptions at a time when scale, predictability, and uptime are paramount. According to the International Energy Agency, global demand for rare earth magnets is expected to double again by 2030, driven largely by electric mobility. For India alone, annual demand could reach 8,000 - 10,000 tones by the end of the decade.
This concentration risk is not theoretical. It is structural, and addressing it requires a strategic policy response that goes beyond incremental localisation.
Electric motors sit at the intersection of cost, efficiency, performance, and reliability. They represent a significant share of an EV’s bill of materials and directly influence vehicle uptime and total cost of ownership. Yet, unlike batteries or electronics, motors have not been explicitly recognised as a critical manufacturing priority within existing incentive frameworks.
Most EVs in India today rely on rare earth permanent magnet motors that use materials such as neodymium and dysprosium, nearly 90% of whose global supply is controlled by China. This creates a single point vulnerability in India’s EV ambitions.
Compounding the challenge, China is increasingly prioritising exports of finished motors rather than raw materials, embedding higher cost and deeper dependency into the supply chain.
Magnet costs alone can account for up to 40% of the total motor cost, introducing pricing volatility that undermines long term affordability. At scale, this volatility risks becoming a barrier to EV adoption, particularly in two wheelers, three wheelers, and commercial logistics fleets where margins are thin, and uptime is critical.
Motor localisation, therefore, is not merely a technological consideration. It is a strategic policy imperative tied directly to supply security, affordability, and industrial sovereignty core objectives of the Atmanirbhar Bharat vision.
India’s manufacturing strength has historically been rooted in frugal engineering and systems level optimisation. Magnet free motor architectures, such as Reluctance, Induction, and Electrically Excited Synchronous Motors (EESM), build on this strength by eliminating dependence on imported rare earth magnets.
These architectures rely instead on abundant and widely available materials such as electrical steel, copper, and conventional laminations. The resulting supply chains are inherently more stable and predictable, insulating manufacturers from global commodity shocks. In practical terms, magnet free powertrains can deliver 10–15% lower lifetime motor costs by avoiding magnet price volatility.
Operationally, these motors also offer advantages, including improved thermal stability, lower maintenance requirements, and greater suitability for demanding duty cycles. Localised manufacturing shortens lead times, improves serviceability, and enhances vehicle uptime factors that are particularly critical for commercial and fleet led EV adoption.
In this sense, magnet free powertrains align directly with the government’s stated objectives of making EVs more affordable while protecting domestic manufacturers from external disruptions.
With Budget 2026 on the horizon, India has an opportunity to recalibrate its EV manufacturing strategy. So far, responses to rare earth vulnerability have largely centred on domestic mining initiatives and overseas sourcing, both of which are capital intensive, long gestation, and geopolitically exposed.
In parallel, magnet free motor technologies are already being designed, validated, and deployed across EV, industrial, and agricultural applications. These efforts should be viewed not as alternatives to mineral sourcing strategies, but as a strategic complement, diversifying risk while accelerating near term resilience.
Introducing a dedicated subcategory within existing manufacturing incentives or PLI schemes for non-magnet motor architectures would bring immediate clarity and confidence to the industry. Formal fiscal recognition would accelerate scale up, encourage domestic IP creation, and ensure India does not miss the next phase of value creation in the EV value chain.
Fiscal incentives and ecosystem support for scaling deep tech hardware
Deeptech hardware innovation operates under very different constraints compared to software led sectors. Long R&D cycles, complex testing and certification requirements, and capital-intensive manufacturing make early stage scale up particularly challenging.
While there is currently no policy framework specifically targeting rare earth free motor development, encouraging signals are emerging. The Ministry of Heavy Industries has been exploring long term approaches to support indigenous motor technologies, and industry bodies such as ACMA have repeatedly highlighted the risks posed by global critical material shortages.
What is needed now is a coordinated ecosystem approach. Fiscal incentives must be complemented by targeted R&D funding, streamlined testing and certification pathways, and investments in shared infrastructure.
Measures such as tax weighted deductions for local R&D, access to common testing facilities, and support for pilot manufacturing can significantly ease early stage capital pressure for emerging players.
Demand linked incentives similar in spirit to FAME can help bridge initial cost gaps and encourage OEM adoption. Public private collaboration on standardisation, pilot deployments, and shared validation infrastructure can further compress time to market and reduce costs.
Together, these measures do more than support innovation. They send a clear signal of national priority and policy confidence in indigenous motor technologies.
Conclusion
As India strengthens its EV ecosystem, the focus must extend beyond vehicles and batteries to the foundational components that determine cost, resilience, and long-term sustainability. Motor manufacturing sits squarely at this intersection.
Magnet free powertrains represent a pragmatic convergence of affordability, supply chain security, and environmental responsibility. With targeted fiscal support and ecosystem level interventions, India can mitigate future risks while building globally competitive, export ready motor technologies.
Budget 2026 can mark the moment when electric motors move from the periphery of EV policy to its strategic core. By supporting magnet free powertrains today, India can position itself not merely as a large EV market, but as a global hub for clean, sovereign, and high value deep tech engineering innovation.
(Bhaktha Keshavachar, Co-founder & CEO, Chara Technologies.)
Views are personal and do not represent the stand of this organisation.
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