India is being hailed as the world’s next electric vehicle (EV) manufacturing powerhouse, projected to become the fourth-largest EV producer by 2030. The government’s ambitious EV30@2030 target aims for 30% electrification of private cars, 70% of commercial vehicles, 40% of buses, and 80% of two- and three-wheelers—adding up to 80 million EVs on Indian roads by 2030.
The numbers are impressive. EV sales grew 52% in May 2025. India now has over 25,000 public charging stations, and domestic firms like Tata Motors and Mahindra are gaining ground. Battery production is expected to nearly triple to 377,000 units in 2025, from 130,000 in 2024, fuelled by new launches from Maruti Suzuki, Hyundai, Mahindra, Tata Motors, and JSW MG Motor.
However, behind this progress lies a sobering reality: India is building an electric future on fragile foundations.
Policy Push and Structural Gaps
The government has deployed various policy instruments to accelerate adoption. The 2021 Production-Linked Incentive (PLI) scheme for battery storage attracted proposed investments of ₹74,850 crores (~$9 billion) over five years. The EV Policy 2024 aligns with India’s climate goals—reducing emissions intensity by 45% by 2030 and achieving net-zero emissions by 2070—while offering incentives to global players like Tesla.
Yet policy alone cannot fix deeper issues. India’s EV ecosystem remains heavily import-dependent. Although it holds the world’s third-largest rare earth reserves, the country imports nearly 100% of its lithium and cobalt. China dominates over 70% of the global lithium supply and controls most of the processing capacity for essential minerals.
Even successful Indian EV firms localise only 30–40% of components, leaving them vulnerable to global supply shocks. India’s battery value chain remains underdeveloped, with limited R&D, weak midstream capabilities, and fragmented charging networks.
Resource Race and Infrastructure Woes
Recognising its vulnerability, India has taken steps to secure upstream resources. During Prime Minister Narendra Modi’s recent visit to Argentina, a pact was signed to acquire five lithium brine blocks, enabling access to Argentina’s reserves within the Lithium Triangle—shared with Bolivia and Chile. State-run Khanij Bidesh India (KABIL) also entered a draft agreement with Argentinian miner CAMYEN.
While charging infrastructure has expanded to over 25,000 stations, utilisation rates remain low. Fragmentation, poor user experience, and lack of standardisation hamper effective usage. China’s recent export restrictions on graphite and gallium, critical EV minerals, underscore the risks of India’s over-dependence on external supply chains.
Private Sector Ambition, Public Risk
Indian companies such as Reliance, Ola Electric, and Amara Raja are planning large-scale gigafactories. However, these investments risk being stranded unless integrated with secure upstream resources and robust midstream processing. Without this integration, India risks becoming a mere assembler in the global EV economy.
To address systemic vulnerabilities, India must crowd in both domestic and international capital while simultaneously building technological capabilities. S&P Global notes a strong rise in India’s 2024 passenger EV output but warns that sustained growth depends on resolving supply chain weaknesses through vertical integration and strategic partnerships.
Three Critical Focus Areas
To achieve this, India must prioritise investment in three critical areas. First, upstream resource security through sovereign wealth participation in overseas lithium and cobalt projects, leveraging India’s diplomatic relationships to secure long-term supply agreements. Second, midstream processing capabilities that can transform raw materials into battery-grade chemicals, reducing dependence on Chinese processing facilities. Third, downstream manufacturing excellence that goes beyond assembly to include advanced battery chemistry research, thermal management systems, and power electronics suited to Indian operating conditions.
McKinsey’s analysis of global EV supply chains highlights the need for ecosystem orchestration—coordinated investments across the value chain, rather than piecemeal efforts. India’s challenge lies in mobilising patient capital for infrastructure-heavy projects with long gestation periods, supported by technology transfer and skill development.
The PLI scheme provides a strong foundation, but it must be complemented by development finance institutions offering concessional capital and risk-sharing mechanisms, particularly in strategic minerals.
Roadmap to Resilience
India needs a clear, phased roadmap, moving from fragmented policy to cohesive strategy:
* Phase 1: Foundation building
Develop a national EV supply chain strategy. Fast-track mining licences for rare earths through a single-window clearance. Expand partnerships beyond Argentina to include Australia and Chile, building a diversified, resilient mineral base.
* Phase 2: Scaling up R&D and localisation
Institutionalise public–private R&D partnerships, modelled on successful initiatives like the US’s ARPA-E. Focus on technologies such as solid-state and sodium-ion batteries. Mandate 60% localisation for EV incentives and standardise charging infrastructure for national interoperability.
* Phase 3: Supply chain integration by 2030
Aim for 70% supply chain localisation. Develop industrial clusters focused on EV components. Build strategic reserves for critical minerals and position India as a regional hub for EV parts and technology.
Strategic Necessity, Not Just Industrial Logic
Vertical integration is no longer optional—it is a strategic imperative. Global leaders like Tesla and BYD have built competitive advantages by controlling everything from mineral sourcing to software integration. In contrast, Indian EV firms depend on fragmented supply chains and imported technologies, exposing them to cost fluctuations and geopolitical risks.
India must develop vertically integrated ecosystems by incentivising large firms to invest across the value chain—especially in battery-grade materials, rare earth magnet production, and thermal systems. This requires PLI-backed backward integration mandates, mid-cap financing tools, and shared infrastructure in industrial zones.
The stakes are geopolitical. India cannot afford to remain vulnerable to China’s control over lithium and rare earth supplies. A supply disruption—due to trade restrictions or conflict—could derail progress overnight. Building EV capacity without securing the supply chain is akin to building a house on sand.
India has a choice: build strategic depth and industrial capability now, or remain dependent on foreign minerals and markets. The future must be made in India, not just for India.
(Soumya Sarkar is an independent expert based in New Delhi and Kolkata. Twitter: @scurve Instagram: @soumya.scruve.)
Views are personal, and do not represent the stance of this publication.
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