- India is intensifying efforts to localise electric vehicle (EV) manufacturing, reducing external reliance.
- This push for localisation goes beyond just manufacturing within the country, with the country encouraging components and the materials themselves to also be sourced locally.
- This week, the government granted electric bus and truck manufacturers within India a six-month extension on localisation rules for electric traction motors, but the trajectory is still clearly towards long-term localisation.
India is pushing localisation within its growing EV industry
It’s not just electric vehicles and automobiles that have production-linked purchase incentives in India, with other industries such electronics, pharmaceuticals, and renewable energy also seeing purchase incentives for products produced locally.
For EVs in particular, the various programmes in place provide financial incentives to automakers and suppliers that meet domestic value-addition requirements. It reflects a wider intention within the Indian government to reduce its exposure to global supply chain disruptions, whilst strengthening its domestic EV industry.
That strategy is already paying off. In 2025, the top five best selling electric cars in India were the MG Windsor, Tata Nexon.EV, Mahindra XEV 9e, Tata Punch.EV, and Tata Tiago.EV. All of these vehicles, including the Chinese branded MG Windsor, are produced locally within India. Whilst production is one thing, stronger localisation is another, and it’s clear that India doesn’t just want EVs produced here – it wants the materials and components themselves to also be locally produced and supplied. New incentives aim to support manufacturing across a much wider automotive value chain, including battery cells, electric motors, power electronics and other key components.
Challenges remain
These localisation goals are an impressive effort, but obstacles still remain in the way, with many critical EV components such as lithium-ion batteries, rare earth magnets, and high-voltage components still being imported from countries such as China and Taiwan. To address the current gap in local battery manufacturing, the government introduced the ongoing Advanced Chemistry Cell production-linked incentive programme back in 2021, with a view to stimulate large-scale domestic battery manufacturing capacity. Foreign companies such as Hyundai have already began battery pack production within India, since this policy came into place.
The challenges of localisation were more clearly seen this week, with the government making slight adjustments to policy in light of supply chain constraints. Now, electric bus and truck manufacturers within the country have been given a six-month extension, until rules come into place surrounding the localisation of electric traction motors, in order for these models to qualify for the PM E-DRIVE purchase incentive scheme.
This particular extension will provide some short-term relief, but it’s still clear that India is pushing for locally produced EVs to contain a much higher proportion of localised components in the future.
