Under the PLI Scheme, Automakers Must Meet 50% Domestic Value Addition as Many Models Fail Eligibility Due to India’s Underdeveloped EV Supply Ecosystem and Challenges in Achieving Localisation Targets
- 87% of EV Models Fail to Qualify Due to High Imported Content
- Only Tata Motors and Mahindra Models Clear Localisation Requirements
- Automakers Cite Immature Domestic Supply Chain
- Core EV Components Still Depend on China and Taiwan
- Government Push vs. Ground Reality
- Path Forward: Stronger Partnerships & Long-Term Investments
India’s electric vehicle (EV) sector continues to face a significant localisation challenge, with the majority of EV models in the country failing to meet the domestic value-addition norms set under the Production-Linked Incentive (PLI) scheme for automobiles. According to a recent report, only 6 out of 46 EV models sold in India — just 13% — currently qualify for incentives, highlighting a persistent reliance on imported components, especially from China.
87% of EV Models Fail to Qualify Due to High Imported Content
Industry sources reveal that 87% of EV models remain ineligible for PLI benefits, largely because their imported content exceeds government-mandated limits. A significant portion of these imports come from China, which continues to dominate the global EV supply chain.
Under the PLI norms announced by the Ministry of Heavy Industries in September 2021, manufacturers must meet at least 50% Domestic Value Addition (DVA), or 40% DVA if battery cells are excluded, to qualify for incentives. Automakers must also comply with the Phased Manufacturing Programme (PMP), similar to the localisation roadmap under FAME-II.
Only Tata Motors and Mahindra Models Clear Localisation Requirements
In a notable development, only Tata Motors and Mahindra have successfully secured PLI approval for their EV models. The six approved vehicles include:
- Tata Punch EV, Tata Nexon EV, Tata Harrier EV, Tata Tiago EV, Tata Tigor EV, Mahindra XEV9E
Surprisingly, Tata’s Curvv EV and Mahindra’s BE.6, despite coming from manufacturers with approved models, failed to meet the DVA thresholds.
Several popular EVs from JSW MG, BMW, Mercedes-Benz, Hyundai, Kia, Citroën, VinFast, Volvo, Audi and even Tesla were found to include over 60% imported components, making them ineligible for the scheme.
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Automakers Cite Immature Domestic Supply Chain
Manufacturers whose models did not qualify point to India’s underdeveloped EV supply ecosystem as a major hurdle.
A senior executive from a European automaker noted that the domestic supply chain for EVs “is still far less evolved than it is for internal-combustion engine vehicles.” Low sales volumes make it commercially unviable for suppliers to set up local production facilities at scale, he added.
Core EV Components Still Depend on China and Taiwan
India continues to rely heavily on imports for critical EV components such as:
- Lithium-ion battery cells
- Rare earth magnets
- DC motors and laminated stators
- Semiconductor chips and PCBs
- Electronic child parts, connectors, relays and DC-DC converters
A PwC study indicates that batteries, motors, power electronics and software — accounting for 50–60% of an EV’s cost — lack adequate domestic manufacturing.
Even locally assembled BLDC motors depend on imported sub-components, while key modules like power electronics “black-box” assemblies remain difficult to localise without major OEM-level capabilities.
Government Push vs. Ground Reality
The government aims to build 50 GWh of battery manufacturing capacity with 60% value addition over the next five years. However, experts warn progress may be slow due to high capital requirements and the complexity of cell technology.
While India’s broader automotive sector has long prioritised localisation, the EV segment faces unique constraints, especially regarding advanced chemistry cells and high-voltage electronics.
Path Forward: Stronger Partnerships & Long-Term Investments
With EVs approaching a 5% share of India’s total car sales, the need for a strong local ecosystem is becoming urgent. Analysts believe that industry collaboration, long-term investment plans and stronger supplier partnerships will be key to building domestic capacity.
Reducing import dependence will not only help India shield its EV sector from global supply disruptions but also pave the way for the country to emerge as a competitive global EV manufacturing hub.
Comment by Author
India’s struggle to localise core EV components underscores a deeper structural challenge — the country is racing toward electrification, but its supply chain is still catching up. With only 13% of EV models meeting PLI norms, the gap between policy ambition and manufacturing readiness is evident.
As EV penetration grows, India must aggressively build capabilities in battery cells, motors and power electronics to avoid long-term dependence on Chinese imports. Meaningful progress will require sustained investments, stronger OEM–supplier partnerships and a clear roadmap that prioritises deep localisation over assembly-led growth.
The next phase of India’s EV transition will be defined not just by how many EVs are sold, but by how many are truly ‘Made in India’ at the component level.
