India is pushing hard to become more self-reliant in electric vehicle manufacturing. The government has set an ambitious target of localising 90-100% of many EV components by 2030. A new report from the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics shows that while the country is making good progress in several areas, some critical gaps remain that could limit the real benefits of this growth.
According to the latest IEEFA report, localisation levels across 12 key EV components in India remain uneven. While structural and mechanical parts such as chassis, suspension systems, and wiring harnesses have achieved high localisation, critical high-value areas like traction motors, motor controllers, inverters, and onboard chargers continue to show very low to low localisation. The report highlights that around 8 out of 12 key components still depend heavily on imported subcomponents, particularly permanent magnets, power semiconductors, and rare-earth materials. This gap in upstream technologies remains one of the biggest obstacles to building a truly self-reliant EV ecosystem in India.
Strong Momentum in EV Sales
Since 2020, India’s electric vehicle sales have grown nearly 14 times. This rapid rise has created huge opportunities for local manufacturers. The report highlights that non-battery parts, such as motors, power electronics, chargers, thermal systems, and control units offer significant potential for Indian companies to build capabilities and create jobs.
India has done particularly well in areas where it already had strong automotive roots, such as structural parts, suspension systems, braking systems, and wiring harnesses. Many new manufacturing projects in these segments have come from companies approved under the government’s Production-Linked Incentive (PLI) scheme.
The PLI Scheme Reality Check
The government has set aside nearly ₹26,000 crore under the PLI scheme for auto and auto components. However, by early 2026, less than 10% of this amount had actually been released to companies. This slow disbursement is seen as one of the key reasons why localisation is not moving as fast as expected.
The Big Challenges
The most difficult areas remain semiconductors (chips) and rare-earth magnets. These are essential for EV motors, power electronics, and advanced systems, but India still depends heavily on imports, mainly from China and Taiwan. Even when a component is labelled “Made in India,” many high-value parts inside it are often imported.
The report makes an important point: simply assembling vehicles or components in India does not automatically create high domestic value. True localisation needs strong local research and development, better access to critical materials, and a more mature supply chain.
Adding to these challenges is the recent controversy involving Rajesh Export. In June 2026, the company, which was allocated 5 GWh under the ACC PLI scheme, faced potential disqualification following SEBI’s interim order citing serious financial irregularities. This setback, along with earlier exits by other players, has further slowed progress in building domestic battery manufacturing capacity.
What Needs to Be Done
To move forward meaningfully, experts recommend:
- Faster rollout of PLI funds to help companies scale up
- Greater focus on developing domestic semiconductor and rare-earth magnet capabilities
- More participation from EV startups in localisation efforts
- Increased investment in indigenous R&D and component standardisation
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The Bigger Picture for India
India wants to become a global EV manufacturing hub. Achieving high localisation is not just about reducing imports, it’s about creating jobs, building technology capabilities, lowering costs over time, and improving energy security.
The next 3-4 years will be crucial. If India can successfully address the gaps in semiconductors and rare-earth magnets while building on its existing strengths, it has a real chance to move from being a large EV assembler to a genuine technology and value creator in the global electric mobility space.
The opportunity is massive, but it will require focused policy action, industry investment, and long-term thinking.
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