India’s EV Surge: Manufacturing for the Future

Why in the News?

1. India’s electric four-wheeler manufacturing capacity is expected to rise sharply from 0.2 million units to 2.5 million units by 2030.
2. This would make India the fourth-largest electric car producer in the world, after China, Europe, and the United States.
3. India’s future electric car production may exceed domestic demand, creating opportunities for exports, but only if Indian manufacturers can reduce production costs and compete globally.
4. Currently, almost all EVs made in India are sold within the country, not exported.

What are the Key Highlights?

 

No.	Event / Development	Timeline / Year
1	India launched consumer subsidies linked with localisation requirements for EVs. (FAME Scheme)	Past decade (policy era beginning ~2015 onwards)
2	Import tariffs of 70–100% on fully built EVs imposed to protect domestic manufacturers.	Ongoing since ~2018
3	Expansion of EV charging infrastructure initiated. (FAME II Scheme)	Post-2019
4	Significant battery cell and module projects were announced and construction began. (PLI Scheme for Advanced Chemistry Cell (ACC))	2021–2024
5	Vietnam’s EV penetration jumped from 3% to 17%, driven by VinFast.	2022–2024
6	India’s EV penetration reached only 2%.	2024
7	Tata, MG, Mahindra together held ~90% of India’s EV market.	2024–25
8	India’s EV manufacturing capacity is recorded at 0.2 million.	2024
9	India is projected to reach 2.5 million EV manufacturing capacity.	By 2030 (future target)
10	India to become the 4th-largest EV producer globally.	By 2030 (future target)

 

1.  India’s Growing Role in the Global Electric Vehicle Market:
   1. India’s electric car production will be more than what the country needs by 2030.
   2. The expected demand is between 4.3 lakh to 14 lakh (1.4 million) vehicles, but production capacity will be 25 lakh.
   3. India can export extra electric cars to other countries in the future.
   4. This export plan matches the government’s goal of ‘Make in India for the world’.
   5. Indian companies must reduce their costs to compete with cheaper Chinese electric cars.
   6. Tata Motors, MG Motor, and Mahindra together controlled about 90% of the Indian EV market in 2024-25.
   7. India will become the fourth-largest electric car maker in the world after China (290 lakh), Europe (90 lakh), and the US (60 lakh) by 2030.
   8. India will be ahead of Japan and South Korea in planned EV production capacity.
2. India’s EV Strategy and Global Comparison:
   1. Japan and South Korea currently have higher EV production capacities, Japan has 11 lakh units, and South Korea has 5 lakh units as of now.
   2. Both countries have limited expansion plans, with little new capacity under construction or announced.
   3. Japan’s EV capacity is expected to reach 14 lakh, and South Korea’s to 19 lakh units by 2030.
   4. India has followed a unique path to build its EV industry using a mix of industrial policies, financial incentives, and protective trade measures.
   5. The government offers subsidies to EV buyers, but these are linked to local manufacturing requirements.
   6. India gives special support to companies making batteries and EV parts within the country.
   7. The country is also expanding charging infrastructure to support the growing number of EVs.
      1. High import taxes (70–100%) on fully built EVs have been introduced to protect domestic manufacturers.
   8. This protectionist approach has helped local EV production grow, but it also reduces choices for consumers and keeps prices high.
3. EV Sales and Battery Manufacturing:
   1.  Electric Vehicle Sales Growth
      1. EV penetration in India was only 2% in 2024, which is quite low.
      2. In comparison, Vietnam’s EV penetration rose sharply from 3% in 2022 to 17% in 2024, mainly due to the success of local company VinFast.
   2. India’s Position in Battery Manufacturing:
      1. India has emerged as a strong player in battery production, especially in cells and modules.
      2. India is expected to become the largest battery module producer after China, the US, and Europe.
      3. India’s cell production capacity will be lower than China, the US, Europe, and Canada, by 2030, but higher than South Korea, Malaysia, Japan, and others.

 

Projected cell manufacturing capacities of different nations by 2030: China: 4,818 GWh United States: 1,169 GWh Europe: 997 GWh Rest of the World (including India): 567 GWh

What are the Significances of Rise in EV Manufacturing?

1. Global Leadership in EV Manufacturing:  India is set to become the fourth-largest electric car producer in the world by 2030, showing its rising importance in the global clean energy market.
2. Export Opportunities: With production expected to exceed domestic demand, India has the potential to become a major exporter of electric vehicles, supporting the government's vision of ‘Make in India for the world’.
3. Strengthening Domestic Industry: India’s mix of industrial policy, subsidies, and trade protection has helped build a strong local EV manufacturing base, reducing dependence on imports.
4. Boost to Battery Sector: India is becoming a key player in battery module and cell manufacturing, which is crucial for energy security, job creation, and reducing battery import dependence.
5. Encouragement for Local Innovation: Government policies that promote localization and battery production encourage technological innovation and the growth of a complete EV ecosystem within India.
6. Improved Infrastructure and Investment: Expansion of charging stations and incentives for battery manufacturing attract both public and private investment, boosting infrastructure development.
7. Environmental Benefits: A strong EV sector will help reduce air pollution and cut greenhouse gas emissions, contributing to India’s climate goals and commitments under international agreements like the Paris Agreement.
8. Strategic Positioning in Asia: By surpassing Japan and South Korea in planned EV capacity, India is positioning itself as a regional EV hub, which strengthens its economic and strategic influence.

What are the Challenges and Way Forward?

No.	Challenges	Way Forward
1.	EV production may outpace domestic demand, leading to surplus.	Develop strong export strategies and trade partnerships to sell surplus EVs in international markets.
2.	High production costs compared to China.	Promote economies of scale, automation, and reduce input costs through innovation and localisation.
3.	High import duties limit consumer choices and increase EV prices	Gradually rationalize tariffs while supporting local industry to balance affordability and protection.
4.	Low EV penetration (only 2% in 2024)	Increase public awareness, improve incentives, and expand EV options to boost adoption.
5.	Limited battery manufacturing infrastructure still under construction	Ensure timely implementation and execution of battery projects.
6.	Risk of delays in ongoing battery projects	Improve project monitoring and provide support to investors and manufacturers.
7.	Underdeveloped EV charging infrastructure	Rapidly expand public and private EV charging stations across cities and highways.
8.	Global competition from China, EU, US, and Vietnam	Focus on niche markets, affordable EVs, and high-quality manufacturing to gain a competitive edge.
9.	Dependence on imported battery materials	Invest in domestic mining, recycling, and research for battery raw materials like lithium and cobalt.

Conclusion

India’s rise in the electric vehicle sector signals a transformative shift in its industrial and environmental landscape. With substantial manufacturing capacity and growing momentum in battery production, the country is positioning itself as a serious player in the global clean mobility race. However, success will depend on how well India navigates cost challenges, builds export readiness, and ensures timely infrastructure development. A forward-looking approach rooted in innovation, strategic investment, and global competitiveness will be essential to convert potential into long-term leadership.

Important Keywords and Definitions of the Article:

No.	Keyword	Definition (in simple words)
1	EV (Electric Vehicle)	A vehicle powered by an electric motor instead of a petrol or diesel engine.
2	EV Penetration	The percentage of electric vehicles sold compared to total vehicle sales.
3	Battery Module	A unit made of multiple battery cells that stores and supplies power to an EV.
4	GWh (Gigawatt Hour)	A unit of energy; used to measure battery production capacity (1 GWh = 10 lakh kWh).
5	Production Capacity	The maximum number of EVs or batteries that a country or company can produce in a year.
6	Localization	Making vehicle parts or batteries inside the country instead of importing them.
7	Make in India for the World	Government’s plan to manufacture in India not just for domestic use but also for export.
8	Import Tariff	Tax charged on imported goods; high tariffs protect local manufacturers from foreign competition.
9	Industrial Policy	Government strategy to support the growth of industries like EVs through incentives and rules.
10	Market Incentives	Benefits like subsidies or tax breaks given to buyers and sellers to promote EV adoption.
121	Protectionist Trade Policy	A policy that protects local industry by imposing high taxes or restrictions on imports.
13	EV Ecosystem	The complete network needed for EVs: vehicles, batteries, charging stations, suppliers, etc.
14	Surplus Capacity	When production is more than domestic demand, allowing for export potential.
15	EV Export Strategy	A plan to sell excess electric vehicles to international markets.

 

Ensure IAS Mains Question:   Q. India’s ambitious growth in electric vehicle manufacturing offers significant opportunities but also poses multiple challenges. Discuss the role of industrial policy, trade protection, and innovation in making India a global EV hub. Also, suggest measures to enhance India’s export competitiveness in this sector. (250 words)

 

Ensure IAS Prelim Questions:   Q. Consider the following statements regarding India’s electric vehicle (EV) sector: India is projected to become the second-largest producer of electric four-wheelers globally by 2030. India’s current EV production is almost entirely focused on domestic consumption. High import duties on fully built EVs in India are intended to encourage domestic manufacturing. Which of the statements given above is/are correct? A. 1 and 2 only  B. 2 and 3 only  C. 1 and 3 only  D. 1, 2, and 3 Answer: B Explanation: Statement 1 is incorrect: India is projected to become the fourth-largest EV producer by 2030, not the second. Statement 2 is correct: Nearly all of India’s current EV production is meant for the domestic market. Statement 3 is correct: Import duties of up to 70–100% are imposed to protect and promote domestic EV manufacturing.