Non-battery EV component manufacturing could hit 90–100% localisation by 2030, a lack of upstream domestic value creation and slow PLI scheme disbursements present critical challenges.
India is on track to achieve an impressive 90–100% localisation across several high-value, non-battery electric vehicle (EV) component categories by 2030.
However, the nation’s push for true domestic value creation is facing severe roadblocks due to a heavy reliance on imported semiconductors, rare-earth magnets, and advanced raw materials.
According to a joint report released today by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics, entitled ‘Beyond battery packs: Localisation in manufacturing EV components’, India’s EV ecosystem requires deep structural shifts to move beyond mere assembly and establish true upstream self-reliance.
The Illusion of Localisation vs. Value Creation
The report highlights a critical distinction between domestic assembly and genuine value creation.
While India excels in manufacturing structural and mechanical components—leveraging its traditional automotive strengths in chassis, suspension, wiring harnesses, and braking systems—the story changes when looking at sophisticated, high-value electronics.
EV-specific systems like traction motors, vehicle control units (VCUs), power electronics, and fast-charging infrastructure continue to rely heavily on imported subcomponents.
“Our analysis suggests that several EV component categories could be manufactured domestically over the coming years,” noted Rahul Maity, Consultant at JMK Research & Analytics and lead author of the report. “However, the extent to which this translates into domestic value creation will depend on the development of capabilities in upstream materials, electronics, and component supply chains.”
Hubs like China and Taiwan
The core vulnerability in India’s clean mobility transition lies in components like rare-earth magnets and microchips.
These technologies are crucial for the operations of power electronics, motors, and control units, yet their production remains overwhelmingly concentrated in geopolitical hubs like China and Taiwan.
Charith Konda, Energy Specialist at IEEFA and co-author of the report, explained that India’s future depends on several macro factors. “A number of factors could influence future localisation outcomes, including access to critical materials, cost competitiveness relative to established manufacturing hubs, supplier scale, component standardisation, and the development of domestic technology capabilities.”
PLI Scheme for Automobile
In a bid to de-risk supply chains, India implemented the Production-Linked Incentive (PLI) scheme for Automobile and Auto Components (PLI Auto), backing it with an initial corpus of INR 25,938 crore (USD 2.98 billion).
The report states that roughly 60% of recent non-battery EV component manufacturing announcements have come from PLI-approved companies.
However, a major bottleneck remains on the administrative side: by early 2026, less than 10% of the allocated PLI funds had actually been disbursed to manufacturers.
This delay in financial deployment could slow down the commissioning schedules of highly anticipated factories specializing in powertrains and charging equipment.
Mapping the Strategic Road Ahead
Despite current supply chain vulnerabilities, industry sentiment remains robust. The massive growth of the domestic market—where annual EV sales have grown 14-fold since financial year (FY) 2020—provides a sustainable baseline of demand.
To bridge the gap between assembly and deep manufacturing, the report highlights a clear checklist for policymakers and industry leaders:
- Fast-track Upstream Supply Chains: Prioritize domestic semiconductor fabrication plants and rare-earth processing facilities.
- Support EV Startups: Expand the scope of national localization programs to include smaller, agile EV startups.
- Component Standardisation: Work toward uniform component sizing and specifications to build scale for local vendors.
- Invest in Indigenous R&D: Shift focus from importing foreign intellectual property to designing systems tailored for Indian conditions.
Jyoti Gulia, CEO of JMK Research & Analytics said “Recent manufacturing investments indicate growing industry confidence in India’s EV component ecosystem, particularly in areas such as motors, power electronics, and charging equipmen.”
Jyoti added “These developments could significantly expand domestic manufacturing capability over the coming five years.”
Whether India successfully transforms into a global EV powerhouse or remains a terminal for foreign components hinges entirely on how swiftly it addresses these vital upstream dependencies over the remainder of the decade.