India sells forty-six different electric vehicle models—yet only six qualify for government manufacturing incentives. This jarring statistic exposes the uncomfortable truth beneath India’s electric vehicle success story: the country is assembling, not manufacturing, its clean mobility revolution. Showrooms brim with electric offerings from Hyundai, Mercedes-Benz, BMW, Tesla, and MG Motor, but scratch beneath the paintwork and you’ll find imported battery cells from China, power electronics from Taiwan, semiconductor chips from Southeast Asia, and rare earth magnets from global supply chains India does not control. The Production Linked Incentive scheme demands at least fifty per cent locally sourced components—a threshold the vast majority of models miss by embarrassing margins, some exceeding sixty per cent imported content. This is not merely a policy curiosity but an existential vulnerability: without localisation, India’s electric vehicle ambitions risk becoming an expensive import dependency disguised as industrial progress.
The Exclusive Club: Only Tata and Mahindra Clear the Bar
Of the forty-six electric vehicle models currently available in India, a mere six meet the Ministry of Heavy Industries’ Production Linked Incentive eligibility criteria. These survivors are dominated by Tata Motors—whose Nexon EV, Punch EV, Harrier EV, Tiago EV, and Tigor EV all clear the fifty per cent local content threshold—alongside Mahindra‘s XEV9E. Notably absent from this honour roll are newer models like Tata’s Curvv EV and Mahindra’s BE6, suggesting that even established domestic manufacturers struggle to maintain localisation standards as they introduce fresh designs.
Tata’s success stems from deliberate vertical integration and early investments in domestic component manufacturing, building supplier relationships over years rather than months. By contrast, international original equipment manufacturers rely on established global supply chains optimised for cost and speed, often importing finished modules—lithium-ion battery packs, inverters, DC motors, semiconductor chips, and power electronics—predominantly from China and Taiwan. For these manufacturers, India remains an assembly hub rather than a core manufacturing base, a reality reflected starkly in their PLI ineligibility.
The stark division between qualifying and non-qualifying models reveals a manufacturing philosophy clash: domestic players betting on localisation versus global players leveraging existing networks. The latter approach delivers vehicles faster and often cheaper, but leaves India importing the very technologies the PLI scheme aims to develop domestically.
The Structural Barriers Preventing Localisation at Scale
Achieving the PLI scheme’s localisation targets proves extraordinarily difficult for reasons rooted in industrial economics and technological complexity. India’s electric vehicle components industry remains young and fragmented, lacking the depth and scale of the mature internal combustion engine supply ecosystem developed over decades. Critical gaps persist in battery cell manufacturing, rare earth magnet production, semiconductor fabrication, and power electronics— precisely the high-value components that differentiate electric vehicles from conventional ones.
Volume uncertainty compounds the challenge. Lower overall EV sales compared to ICE vehicles mean potential suppliers hesitate to establish manufacturing bases in India, where returns remain speculative. This creates a vicious cycle: without local suppliers, manufacturers import components; without committed off-takers, suppliers won’t invest in capacity. Technologies like lithium-ion cells, rare earth magnets, laminated stators, printed circuit boards, and semiconductor chips involve specialised processes dominated globally by Chinese manufacturers, creating hard dependencies difficult to break through policy alone.
Global production networks further entrench the status quo. Many international manufacturers prioritise supply chains optimised over years for cost efficiency and just-in-time delivery. Reconfiguring these networks for Indian localisation demands not merely willingness but substantial capital expenditure and multi-year commitments—investments difficult to justify when India’s EV market, though growing rapidly, remains a fraction of China‘s or Europe‘s. An industry executive summarised the dilemma bluntly: meeting localisation mandates requires developing an ecosystem of suppliers and investors willing to back component production locally, and that ecosystem remains fragile.
Building the Missing Ecosystem: What India Must Do Next
Closing the localisation gap and enabling broader PLI eligibility demands coordinated interventions across multiple fronts. Scaling domestic battery manufacturing stands paramount, with India initiating multiple gigafactory projects targeting fifty gigawatt-hours of lithium-ion cell production capacity by 2030. These investments aim to reduce import dependence and supply chain vulnerabilities, though current capacity lags far behind announced ambitions.
Upstream raw material processing deserves equal attention. Increasing local refining and processing of rare earth minerals and battery metals through partnerships with resource-rich nations like Australia and Chile can secure supply chains currently dominated by Chinese refiners. India possesses neither the mineral deposits nor the refining infrastructure to go it alone, making strategic partnerships essential rather than optional.
Developing power electronics and semiconductor fabrication capabilities requires focused investments, technology transfers, and policy incentives tailored to high-value component manufacturing. These are not commodities assembled from generic parts but sophisticated products demanding specialised equipment, clean-room facilities, and technical expertise India currently lacks at scale. Encouraging tier-two and tier-three supplier growth through fiscal incentives, infrastructure provision, research and development support, and industrial clustering can attract investment and enhance capabilities, gradually building the supplier density that makes localisation economically viable.
Aligning standards and establishing testing facilities ensures quality and facilitates integration into global supply chains, allowing Indian-made components to compete internationally rather than serving only the protected domestic market. A leading European automaker observed that India’s EV localisation journey is underway but will require patience, collaboration, and tailored policies suited to component manufacturing, not merely vehicle assembly—a candid acknowledgement that current approaches remain insufficient.
Successfully localising electric vehicle manufacturing aligns with India’s broader geopolitical and economic objectives: reducing strategic dependencies that leave the country vulnerable to supply disruptions, generating millions of manufacturing jobs, enhancing export potential, and securing leadership in the global EV value chain. The PLI scheme, with over ₹1.75 lakh crore in investments announced across manufacturing and battery capacities, remains central to this vision. Yet the current reality—forty eligible models, only six qualifying—underscores that India’s electric revolution stands at a sensitive juncture where demand surges whilst the complex supply chain ecosystem remains embryonic.
Without accelerated localisation, most EV models will continue missing critical PLI support, slowing scale and increasing import bill vulnerabilities. As a senior Ministry of Heavy Industries official observed, building a self-reliant EV industry demands coordinated action across mining, manufacturing, technology, financing, and skills development—far beyond vehicle subsidies alone. The PLI scheme vividly exposes supply chain challenges beneath the electric vehicle market’s glossy surface. Overcoming this bottleneck requires bold industrial policy, fresh investment in batteries and components, strategic raw material partnerships, and supplier ecosystem development. The road ahead is complex but opportunity-rich: as local capacities grow, India can emerge as a credible global EV manufacturing powerhouse, unlocking economic growth, job creation, and energy security. The time to deepen localisation is now, before the window closes and India’s electric vehicle revolution becomes permanently dependent on imported technologies it cannot control.