India’s EV Market Faces PLI Hurdles as Most Models Miss Local Value Addition Norms

India’s electric vehicle sector continues to lean heavily on Chinese imports despite rapid growth in domestic demand. Recent reports show that only a handful of models meet the government’s localisation norms.

Most manufacturers still rely on imported semiconductors, magnets and batteries. This has kept the industry dependent on global supply chains at a time when the government is pushing for deeper domestic value addition.

Limited Eligibility Under the PLI Scheme

According to news reports, only 6 out of 46 EV models sold in India meet the production-linked incentive (PLI) scheme’s domestic value addition criteria. This places roughly 13% of the market within the eligibility bracket.

The remaining 87% of models were found to contain imported components exceeding stipulated thresholds. China remains the primary source for most of these essential parts.

Local Value Addition Rules and Approved Models

The Ministry of Heavy Industries introduced the PLI scheme for automobiles and components in September 2021. It requires automakers to achieve at least 50% domestic value addition (DVA), similar to the Phased Manufacturing Programme under FAME-II. The government has relaxed the norm to 40% for companies importing battery cells. Only 6 EV models have been approved, including 5 from Tata Motors and 1 from Mahindra.

Gaps in Localisation and Component Dependence

Reports highlight that several popular EVs, such as Tata Curvv and Mahindra BE6, did not meet the PLI requirements. Indian EV manufacturers rely on China and Taiwan for a range of components, including connectors, contactors, relays and DC-DC converters.

Key parts like advanced battery chemistries, electric motors and power electronics account for 50–60% of an EV’s structure. Many of these technologies have limited domestic manufacturing capabilities.

Challenges in Building Manufacturing Capacity

The PLI scheme aims to develop 50 GWh of battery manufacturing capacity, with up to 60% value addition, over a period of 5 years. However, the progress may be slow due to high investment needs and the complexities of cell production.

A PwC study notes that localisation brings advantages for India’s automotive sector, especially after global supply disruptions and recent geopolitical tensions. Yet the localisation of EV manufacturing remains challenging because of intricate component requirements and infrastructure limitations.

Read More: Govt Approves 17 Electronics Projects Under PLI Scheme.

Conclusion

India’s EV market continues to face hurdles in reducing dependence on imported components. The PLI scheme highlights both the opportunity and the complexity of building robust domestic supply chains.

While several models have met the localisation norms, the majority still rely on foreign inputs, especially from China. A coordinated push from government initiatives and private investment may help strengthen the ecosystem in the coming years.

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