India’s Electric Vehicle (EV) market is entering a ‘post‑adoption’ phase, with demand firmly established and cumulative sales expected to cross 6.16 million units by FY2025, including over 2 million units annually. The electric bus segment is becoming the strategic priority because of its strong impact on public transport decarbonisation and tender‑driven scale, which demand deep manufacturing capabilities and resilient supply chains. Electric three‑wheelers are the next key pillar for commercial and shared mobility, where rising volumes and competition make product reliability, localisation, and after‑sales support crucial. Electric two‑wheelers still account for the largest share of registrations, confirming mass‑market penetration, but leadership will now be defined less by sheer growth and more by integration in manufacturing, technology control, and supply‑chain strength across buses, three‑wheelers, and scooters.
India is steadily increasing localisation of EV components, but critical gaps in domestic capacity remain. Infrastructure for in‑country component manufacturing is still inadequate, and India currently generates only about 13% of the total value addition needed to fully qualify for local manufacturing incentives, leaving the bulk of high‑value parts imported. This dependence means 50%–60% of a vehicle’s value often comes from foreign‑made components, which constrains the real economic contribution of Indian firms and slows the development of a deeper local supply base. Heavy reliance on imports also exposes manufacturers to currency fluctuations, freight disruptions, and geopolitical risks, creating volatility in pricing and total EV production costs even as policymakers push for greater localisation.
Lithium‑ion batteries remain the most critical and vulnerable element in India’s EV value chain, both in terms of cost and supply risk. Industry estimates indicate that roughly 75%–80% of total battery‑related cost and supply‑chain exposure is tied to lithium‑ion cells themselves, while the key raw materials for these cells are still almost entirely imported. This includes high‑value inputs such as lithium, nickel, and cobalt, whose foreign sourcing keeps battery prices elevated and limits India’s control over strategic resources. Until India develops meaningful domestic capabilities in cell manufacturing and advances in alternative chemistries, lithium‑ion batteries will continue to be a structural weakness in the country’s electric vehicle manufacturing competitiveness.
Recognising this, Indian OEMs are shifting from assembly-led expansion to deep manufacturing localisation. The focus now extends beyond pack assembly to cell-level manufacturing, motors, inverters, and advanced power electronics.
The government has been the primary force behind the development of the Electric Vehicle Framework in India, which has evolved from a demand-driven model supported by subsidies to a supply-oriented one. The introduction and continued growth of initiatives such as production linked incentives (PLI) schemes for battery and component manufacturing have been instrumental in creating the conditions under which manufacturers can develop at both the first and second tiers (Tier-1 and Tier-2). In addition, long-term policy initiatives like the Prime Minister Electric Vehicle Decommission/Retrofit Initiative (PM-E-DRIVE), National Lithium Exploration Programs, and duty exemptions for priority projects, represent form of governmental support to develop and sustain domestic manufacturing capabilities for electric vehicles through providing a predictable policy environment to manufacturers of high-value add components.
Additionally, state-level policies developed and implemented in Telangana, Tamil Nadu, Karnataka, Gujarat and Maharashtra have been successful in further supporting the establishment of manufacturing hubs through the provision of land grants, capital incentives, and renewable energy support.
The overall success of India’s electric vehicle supply-chain strategy will rest heavily on how well the four pillars of the framework are implemented:localising production of high-value add components, developing Tier-1 and Tier-2 manufacturing capabilities, obtaining a secured supply of critical minerals, and providing dependable and predictable policy support. Protectionism will result in a limited or cocooned industry that will ultimately undermine the long-term viability of the electric vehicle supply-chain in India, while also deterring foreign investments in the supply-chain. Therefore, it is critical that manufacturers are provided with predictable policies that support time-limited incentives, and/or that reward legitimate localisation of their manufacturing processes and future-oriented global competitiveness are crucial.
There is no longer room for doubt regarding India’s EV program. India is able to leverage its scale, demand and favourable policy momentum to enhance the growth and development of the EV industry within India. What remains to be seen is how well India can create depth within its EV industry – both in terms of manufacturing, as well as in terms of the quality and availability of suppliers and other material inputs. The next few years will determine how India will be able to localise the high-value components and how quickly the country is able to build its supply chain, which will ultimately determine whether India continues as simply an assembly hub, or becomes a true global EV manufacturing power.
 market is entering a ‘post‑adoption’ phase, with demand firmly established and cumulative sales expected to cross 6.16 million.){kind=link}