The Need for Strengthening India’s EV supply chains

Syllabus: GS3/Environment

Context

• As EV adoption gathers pace in India, there is a greater need to focus on reducing vulnerability to external shocks.

About

• Around 2.5 million vehicles were sold in FY26, a significant increase from FY25.
• As the sector scales, India is moving away from imported fossil fuels while becoming increasingly dependent on imported lithium-ion batteries.
• EV growth must now be judged by three additional metrics: supply chain resilience, strategic autonomy, and long-term sustainability.

India’s Domestic Cell Manufacturing

• India’s domestic cell manufacturing is still far below the scale needed to alter import dependence meaningfully. 
• Under the ACC Battery Production Linked Incentive scheme, 40 GWh of capacity has been awarded, but only about 1 GWh has been installed so far. 
• Meanwhile, passenger EVs sold in India are sourcing batteries from 14 global manufacturers, with 7,987 MWh imported in 2025. 
  • A significant share came from Chinese manufacturers, highlighting that increasing EV sales are tightly correlated with increasing imports from China.

Concerns

• Dependence on Single Country: Battery supply is increasingly exposed to a single-country ecosystem that is shaped by policy, geopolitics, and industrial strategy outside India’s control.
  • Several developments in China are influencing pricing and availability, like tighter technology restrictions, prioritisation of domestic demand, withdrawal of VAT exemptions on battery exports. 
• Geopolitical Situation: The West Asia conflict has compounded the pressure through higher raw material costs, elevated manufacturing expenses in China, and rising transport and risk premiums.
• Impact on Indian Market: In a market as price-sensitive as India’s they can confine EVs to premium segments and place national adoption targets at risk.
  • If the situation persists and OEMs (original equipment manufacturers) are forced to pass on higher costs to consumers.

Way Ahead

• Indian manufacturers should begin type-testing vehicles across emerging chemistries, including sodium-ion batteries. 
  • Sodium-ion is not yet a full substitute for lithium-ion across all use cases, but it could serve as a meaningful hedge as production scales domestically.
• India’s path forward lies in building a structured ‘EV supply chain alliance’ with trusted partners, one that spans minerals, manufacturing, technology, and standards.
  • Such an alliance would distribute risk across geographies, deepen domestic capability over time, and ensure that no single external disruption can stall India’s electrification agenda.

Conclusion

• India has already demonstrated that it can create demand for clean mobility. The next test is whether it can build the industrial depth to sustain that demand without becoming dependent on a single external bottleneck. 
• The goal should not be merely to electrify faster, but to electrify intelligently, securely, and on terms that strengthen India’s long-term strategic and economic autonomy.

Source: TH