The need for strengthening India’s EV supply chains, Pg10

Key Highlights:

• India's Electric Vehicle (EV) sales reached 2.5 million units in FY26, indicating a significant growth phase.
• This growth has led to increased dependence on imported lithium-ion batteries, particularly from China.
• Only 1 GWh of domestic battery manufacturing capacity has been installed, against 40 GWh awarded under the ACC Battery Production Linked Incentive (PLI) scheme.
• In 2025, 7,987 MWh of batteries were imported, highlighting a strategic vulnerability in the EV supply chain.
• Solutions proposed include supply chain diversification, focusing on product-level efficiency, and exploring alternative chemistries like sodium-ion batteries.

Detailed Insights:

• India's initial EV adoption was successfully driven by demand-side interventions such as purchase incentives and road tax exemptions.
• The focus is now shifting from rapid electrification to ensuring supply chain resilience, strategic autonomy, and long-term sustainability.
• Over-reliance on a single-country ecosystem, mainly China, exposes Indian Original Equipment Manufacturers (OEMs) to geopolitical and policy-driven risks.
• External factors like VAT exemptions withdrawal in China and the West Asia conflict have contributed to battery inflation and higher manufacturing costs.
• Elevated battery costs can delay price parity with Internal Combustion Engine (ICE) vehicles, potentially restricting EVs to premium market segments.
• OEMs are exploring a "China + 1" sourcing strategy to diversify suppliers and reduce dependence on a single source.
• Product modifications, including lighter vehicle architectures, efficient drivetrains, and battery right-sizing, are crucial for cost-effective EVs in the Indian market.
• Developing an 'EV supply chain alliance' with trusted international partners is essential to distribute risk and deepen domestic capabilities.

Scientific/Technical Concepts Involved:

• ACC Battery Production Linked Incentive (PLI) Scheme: A government initiative launched in October 2021 by the Ministry of Heavy Industries to promote domestic manufacturing of Advanced Chemistry Cell (ACC) batteries, targeting 50 GWh capacity by 2026.
• Strategic Autonomy: The ability of a state to pursue its national interests and foreign policy independently, without heavy reliance or structural dependence on other foreign states.
• Sodium-ion Batteries: An emerging rechargeable battery technology that uses abundant sodium ions as charge carriers instead of lithium, offering potential for cost reduction, enhanced safety, and reduced import dependence.
• NMC and LFP Batteries: Two common types of lithium-ion batteries differing in cathode chemistry; NMC (Nickel Manganese Cobalt) offers higher energy density, while LFP (Lithium Iron Phosphate) provides better safety, longer cycle life, and lower cost.