Environment Laws

Scope of Electric Vehicle (EV) Manufacturing in India

calendar12 Apr, 2023
timeReading Time: 4 Minutes
Scope of Electric Vehicle (EV) Manufacturing in India

The entire country recently rejoiced when the government announced that India had discovered an untapped 5.9 million-ton stash of lithium reserves located in the Jammu and Kashmir region which will significantly help India reduce the dependence on other countries for the supply of lithium, a key component in EV batteries.

To support the target of reaching 30 per cent of all vehicles sold by 2030 to be EVs, the government made purchase reductions across many vehicle categories, lowered road taxes, and scrapped and retrofit incentives. A phased manufacturing roadmap has been developed by the government taking into account the current state of EV manufacturing in India. The focus is also on the development of technology related to EV batteries, the vehicle’s safety and durability and reducing the overall cost of maintaining an EV to match it with conventional engine vehicles.  By legislating favourable policies and aiding the manufacturers in the market penetration or giving incentives to the consumers for the acceptance of EVs over conventional vehicles. The government is not only trying to promote EV manufacturing in the country, but also the sale and acceptance of EVs through developing supporting infrastructure like encouraging the setup of EV charging stations, tax incentives for EV owners, public EV charging infrastructure development, and so on.

Till 31st July 2021, there were 380 electric vehicle manufacturers in India with 39 in the 2 wheeler segment, 81 in the 3 wheeler segment 19 in the 4 wheeler segment, while the rest working in other or 2 or more segments. With the increasing adoption of electric vehicles in the landscape, this number is only expected to increase further. With the current projections of the government, India will soon be emerging as the global hub of EV manufacturing. All these developments will significantly reduce the cost of production of electric vehicles and open an even bigger market.

Incentives by the Government to Boost EV Manufacturing in India

The incentives by the government have been designed to encourage both demand and supply. Both Central and state governments have been focussing on promoting the development of technology, developing manufacturing capacity for electric vehicles and assisting in the acceptance of EVs among consumers.   Manufacturing of electric vehicles, their assemblies and parts/ inputs of the sub-assemblies will be facilitated through a graded duty structure. The goal is to boost value addition and capacity building of the sector significantly in the country. The following are some of the schemes introduced by the government to promote the mobility of EVs in the country.

National Electric Mobility Mission (NEMMP)

The National Electric Mobility Mission Plan 2020 is a composite scheme that is of the most important and ambitious initiatives undertaken by the GOI with a potential to bring transformational paradigm shift in the transportation and automotive industry. This plan is a culmination of collaborative planning for promotion of electric and hybrid mobility in the country through different policies and aimed to ensure a vehicle 6-7 million electric and hybrid vehicles in India by the year 2020 and indigenisation of technology to create a global leadership in some segments of automobile manufacturing.

Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) – I and II

To promote EV manufacturing in India, the government offered capital subsidies through the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME) India Scheme Phase II and state-level measures, FAME is currently India’s flagship scheme for promoting electric mobility in India. It was launched by DHI in 2015. FAME-II was implemented for three years, i.e. 1st April 2019, with a budget allocation of 10,000 Cr, including spillover from FAME-I of Rs. 366 Cr.

State-Wise EV Policies

Today, approximately 26 states in India, including Andhra Pradesh, Karnataka, Kerala, MP Uttrakhand, UP Goa, Gujrat, Meghalaya, Assam, West Bengal, Odisha and Rajasthan have endorsed their own EV policies.

Production-Linked Incentive (PLI) Scheme

The Indian government launched a 2.4 billion USD PLI project for Advanced Chemistry Cell (ACC) Battery Storage manufacturing in May 2021 in order to build a local manufacturing capacity of 50 GWh of ACC. This would increase capacity, localize the EV supply chain, and reduce import dependency.

Relaxation in Driving Regulations

MoRTH[1] announced to allow teenagers between the ages of 16 and 18 to operate e-scooters in India at a top speed of 70 km per hour by changing the country’s motor vehicle laws. The government also announced that these electric scooters would require vehicle registration and have a green number plate. Along with supporting the government’s objective to enhance electric mobility in the nation, the move will also raise sales of electric scooters.

Overview of India’s EV Market

India’s EV market is expected to expand at a compounded annual growth rate (CAGR) of 49% between 2021-2030, with the segment’s volumes set to cross yearly sales of 17 Million units by 2030.

  • EV sales have surged more than 2,218 per cent over the past three years, with over 4,42,901 electric cars sold till December 2022, as compared to 19,100 sold in FY 2020.
  • EV manufacturing in India also got a push from the declining battery costs. Successful EV economics can now be seen in many tier 1 cities due to this reduced cost of EVs. Additionally, the benefits received by the consumers in the form of subsidies & non-financial incentives (e.g., road access and registration privileges) also add to a snowball effect.
  • Total charging stations in India increased by 285% y-o-y in FY22; robust government initiatives are likely to further the expansion to ~4 lahks by FY26.


Catering to a vast domestic market, reliance on the conventional modes of fuel-intensive mobility will not be sustainable. In an effort to address this, policymakers are developing a mobility option that is a combination of all three “Shared, Connected, and Electric” and has projected an ambitious target of achieving 100 percent electrification by 2030. Today when compared with the sale of conventional vehicles, India has a low acceptance rate when it comes to Electric Vehicles. To meet its global commitment and mitigate the environmental impact of conventional automobiles, the government is keen to shift the narrative towards EV manufacturing in India. Although, considerable work remains to be done in terms of model types, safety, infrastructure available for charging, and financial incentives given to EV manufacturers. However, to tap this vast potential and capture significant market share by being the first comers, a business setup must be accompanied by guidance from licencing and compliance experts to fulfil the businesses’ legal obligations.

Read Our Article: An Overview Of Electric Vehicle Business In India

Request a Call Back

Are you human? : 8 + 6 =

Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality