Falling short: India must ensure technology transfer in the EV segment, Pg6

Key Highlights:

• Context: The article discusses India's new policy offering reduced import duties on electric vehicles (EVs) to attract foreign investment and promote domestic manufacturing, but also highlights concerns in the sector.

• India announced a 15% concessional import duty on EVs under the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI).

• Manufacturers must invest at least ₹4,150 crore over three years and ensure 25% domestic value addition (DVA), rising to 50% in five years.

• A maximum of 8,000 completely built units (CBUs) can be imported annually per manufacturer for five years.

• India’s EV push began in 2015 with the FAME scheme, expanded to ₹10,000 crore under FAME II in 2019.

• China’s EV dominance stems from early policy support, $230 billion in subsidies, and mandated joint ventures for technology transfer.

• China leads global EV sales with 11.3 million units in 2024; India lags in battery manufacturing and vertical integration.

Detailed Insights:

• Delayed Start: India entered the EV policy space in 2015, lagging behind China (2009) and the U.S. (2010), impacting early momentum.

• Fragmented Strategy: Unlike China’s unified approach combining subsidies, joint ventures, and infrastructure support, India's policies are piecemeal.

• Lack of Tech Transfer: Absence of mandated joint ventures limits India’s ability to access and internalise core EV technologies, especially battery tech.

• China’s Vertical Integration: China's control over the entire battery value chain — from mining to assembly — enables cost competitiveness and scale.

• Need for Local Innovation Ecosystem: Without investment in R&D and indigenous capability building, India risks becoming an assembly hub rather than a technology leader. Way forward:

• Mandate Technology Transfer: Require foreign EV manufacturers to enter joint ventures with Indian firms and share core technologies, especially in battery and powertrain domains.

• Upgrade Infrastructure: Accelerate the rollout of charging stations, battery swapping networks, and grid upgrades to support large-scale EV adoption. Key Concepts Involved:

• Domestic Value Addition (DVA): The share of a product’s value that is added domestically through local manufacturing and services.

• Completely Built Unit (CBU): Fully assembled vehicles imported into a country, typically attracting higher duties.

• Vertical Integration: A business strategy where the entire production process is controlled by a single entity, enhancing efficiency and self-reliance.

Mains Mock Question:

“India’s EV transition must prioritise technology transfer and localisation to avoid import dependence. Discuss with reference to recent policy developments.”