In a big development, Centre on Friday has approved the E-Vehicle (EV) policy to promote India as a manufacturing destination for EVs, with a minimum investment of ₹4,150 crore required with no cap on maximum investment, which will pave the way for companies like Tesla to set up its factory in India.
“It is the beginning of a new era for the Indian EV market. We will see new players, new aspirational products under this scheme. The EV market would be unstoppable now! Expect players like MG, VINfast, Tesla, JSW, and many more to take advantage of this policy,” Puneet Gupta, Director, Vehicle Sales & Powertrain Forecast-India and ASEAN at S&P Global Mobility, told businessline.
He said the size of the premium EV market may also reach new heights. “Can this policy reignite the EV story, and the answer may be that this may help us reach the inflection point much sooner than expected for cars,” Gupta added.
Attracting investments
According to a statement by the Ministry of Commerce and Industry, the policy is designed to attract investments in the e-vehicle space by reputed global EV manufacturers.
Shradha Suri Marwah, President, Automotive Component Manufacturers Association of India (ACMA), said, “The policy not only aims to attract global EV majors to invest in India but also emphasises significant DVA criteria, ensuring the creation of a robust supply-side ecosystem.”
This move would help access global technologies, expand product ranges, and improve cost competitiveness, all of which would facilitate enhanced EV adoption, said corporate rating agency ICRA. ICRA expects about 15 per cent of new car sales to be electric by 2030.
Component localisation
“This policy would aid in increasing EV component localisation in India, which is currently at 30-40 per cent. Chassis components that require minimal technology upgrades are manufactured locally. There has been substantial localisation in traction motors, control units, and battery management systems over the years, while battery cells, which constitute 35-40 per cent of the vehicle cost, are still entirely imported. This scheme gives rise to manufacturing opportunities for domestic auto component suppliers,” Shamsher Dewan, Senior Vice President and Group Head at ICRA, said.
For parts that are already used in internal combustion engines (ICE), there could be technological advancements in certain cases, resulting in higher content per vehicle. The e-PV component market is expected to be at least ₹50,000 crore in terms of revenue potential for ancillaries, he added.
“With a minimum investment threshold and a clear roadmap for domestic value addition, this policy underscores the government’s commitment to nurturing a robust EV ecosystem...By incentivising local manufacturing and fostering healthy competition, this policy will not only accelerate the adoption of EVs but also bolster economic growth by reducing our reliance on imported crude oil,” Sunjay Kapur, Chairman, Sona Comstar, and Deputy Chair, CII Northern Region, said.
However, according to some industry veterans, they need to see the fine print of the policy as to what happens to domestic players such as Tata Motors and Mahindra & Mahindra, and established players like Hyundai Motor India and Kia India, which have a focus on EVs for their future cars.