India’s EV Mission: Progress Delayed, Not Denied

Concessional Import Duty:

• It means the government charges a lower-than-usual tax on goods (like electric vehicles) that are brought into the country from abroad.
• This lower tax is not for everyone — it is given only if certain conditions are met, like investing money in India or using locally made parts.
• Example: Normally, importing an EV might attract over 100% tax, but under India’s new EV policy, companies can pay just 15% tax if they invest ₹4,150 crore and start using Indian-made parts in a few years.

Domestic Value added:

1. Domestic Value Addition (DVA) means how much of the product’s total value is created within a particular country — in this case, India.
2. If the DVA is 30%, it means 30% of the product’s value comes from India, and 70% comes from other countries.
3. India wants to increase the DVA for products made here so that:
   1. More jobs are created inside India.
   2. Indian industries grow stronger.
   3. The country becomes less dependent on imports.
   4. The economy benefits by keeping more money circulating within.

Types of Electric Vehicles:

Challenges for India:

Way Forward:

No Technology Transfer Clause: Unlike China’s mandatory tech-sharing via joint ventures, India’s policy lacks mechanisms to ensure domestic firms gain foreign technology.

Mandate technology transfer in EV-related foreign investment policies: Ensure foreign companies investing in India share EV-related technologies, helping Indian firms build local capabilities.

Low Battery Technology Capability: India does not control the full battery value chain (mining, processing, assembly), risking Indian firms being limited to vehicle assembly without capturing value.

Promote battery value chain development – from raw material sourcing to battery cell manufacturing: Develop the entire battery ecosystem domestically to reduce import dependence and cut EV costs.

Repurposing ICE Component Makers: Manufacturers of petrol/diesel vehicle parts face job risks and need strong support to transition their production to EV components.

Integrate software and hardware innovation (India's strength in IT + auto sector): Leverage India's IT expertise to develop smart, connected EVs that integrate both digital and mechanical systems. Also, strengthen public EV charging infrastructure.

Weak Global EV Market Position: India’s EV sales and market share remain minimal compared to global leaders like China, Europe, and the USA.

Expand FAME scheme benefits to R&D and innovation, not just demand creation: Broaden the FAME scheme to support innovation and domestic development of EV technologies, not just consumer subsidies.

Ensure IAS Mains Question:

Q. India’s new EV import policy aims to attract global players, but the absence of a technology transfer framework and weak battery ecosystem may limit long-term gains. Critically analyse India’s EV strategy in comparison with global approaches. (150 words)

Ensure IAS Prelims Question:

Q. Consider the following about India’s EV policy:

1. Linking concessional import duty with investment and localisation encourages domestic manufacturing.
2. Limiting imports of fully built EVs helps protect and grow local industry.
3. Mandating technology transfer ensures Indian firms gain advanced EV know-how.

Which of the above statements is/are true in the context of India’s EV mission?

1.  1 and 2 only
2. 2 and 3 only
3. 1 and 3 only
4. 1, 2 and 3

Answer: d

Explanation:

Statement 1 is correct:  Linking concessional import duty with required investment and localisation encourages companies to manufacture EV components domestically. This boosts India’s manufacturing ecosystem, reduces import dependence, and helps build long-term industrial capacity rather than just importing finished vehicles.

Statement 2 is correct:  Limiting imports of fully built EVs protects domestic manufacturers from being overwhelmed by foreign imports. It gives local firms time and space to develop production capabilities, scale operations, and compete effectively in the growing EV market.

Statement 3 is correct: Mandating technology transfer ensures that foreign companies share advanced EV technology with Indian firms. This helps build domestic expertise, promote innovation, and enables India to move beyond assembly to become a technology leader in electric vehicles.