Import reliance weakens India’s EV localisation push
Factory ramp-ups and incentive thresholds are slowing India’s shift from announced capacity to production.
India’s electric vehicle localisation drive could leave manufacturers dependent on imported subcomponents even if domestic factories meet 90% of component demand by 2030.
The forecast measures India’s manufacturing capacity rather than the proportion of every component produced locally, said Rahul Maity, electric vehicle consultant at JMK Research Analytics.
“That actually means domestic manufacturing capability,” Maity said. A traction motor assembled in India, for example, could still contain imported parts despite being classified as locally manufactured.
The distinction exposes the limits of headline localisation targets as India seeks to build a domestic electric vehicle supply chain. Local assembly may expand rapidly without removing dependence on overseas suppliers for critical technologies and materials.
Maity also rejected the view that India’s production-linked incentive scheme has attracted little use. Companies must fulfil investment commitments, achieve required sales and reach at least 50% domestic value addition before receiving incentives.
Many approved manufacturers have yet to meet those thresholds, delaying payments rather than indicating weak participation. About 60% of companies that recently announced, invested in or commissioned electric vehicle component projects have been approved under the scheme.
“This scheme is actually successfully driving the investments,” Maity said.
The gap between announced capacity and actual production also reflects the time required to build factories. Manufacturers must complete construction, install machinery, secure regulatory approvals and address financing before starting operations.
India’s localisation rate could therefore rise as recently announced facilities begin operating. The larger test will be whether domestic suppliers eventually move beyond assembly and develop the critical subcomponents that currently keep the industry tied to imports.
