India can achieve 90-100% EV component localisation by 2030, but one big hurdle remains: Report
India can achieve 90-100% EV component localisation by 2030, but one big hurdle remains: Report
India could achieve 90-100% localisation across several non-battery EV component categories by 2030, but dependence on imported semiconductors and rare-earth magnets remains a major hurdle. A new IEEFA-JMK Research report says deeper domestic value creation will depend on strengthening upstream capabilities in chips, magnets and advanced materials.
Basudha Das
- Jun 24, 2026,
- Updated Jun 24, 2026 9:15 AM IST
India could achieve 90-100% localisation across several high-value electric vehicle (EV) component categories by 2030, but the country's push for deeper self-reliance faces a major obstacle: dependence on imported semiconductors, rare-earth magnets and advanced materials.
According to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics, recent investments in powertrain systems, power electronics and charging infrastructure could help India significantly expand domestic manufacturing capabilities over the next five years.
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Non-battery components
The report highlights that EV-specific systems excluding batteries—including motors, power electronics, thermal systems, chargers and vehicle control units—account for a significant share of vehicle value and present major localisation opportunities.
If announced manufacturing capacities are commissioned successfully and supplier ecosystems continue to mature, several of these component categories could achieve near-complete localisation by the end of the decade.
MUST READ: Mercedes-Benz VLE: World's first grand sedan is an 8-seat EV with 700+ KM range
India's EV market has grown nearly 14-fold since FY2020, reshaping the automotive value chain and creating new opportunities for manufacturers. Electric two-wheelers, three-wheelers, buses and passenger vehicles accounted for 99% of EV registrations in FY2026, underlining the rapid expansion of the market.
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Localisation push
The report notes that localisation has progressed most strongly in segments that align with India's existing automotive manufacturing strengths. Structural components, wiring harnesses, suspension systems, braking systems and thermal systems have already achieved high levels of domestic sourcing.
Meanwhile, investments are increasingly being directed towards historically import-dependent areas such as traction motors, power electronics, motor controllers and charging systems. Companies including Bosch, Valeo, Nidec, Uno Minda and Exicom have announced or expanded manufacturing facilities for several critical EV components.
MUST READ: Citroën shakes up EV market with ë-C3X, introduces pay-as-you-drive battery model
About 60% of recent EV component manufacturing announcements have come from companies approved under the Production-Linked Incentive (PLI) scheme for automobiles and auto components.
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Chips and rare-earth magnets
Despite the progress, the report warns that high localisation does not necessarily translate into high domestic value creation.
Many components assembled in India still depend on imported chips, rare-earth magnets and specialised materials. Around eight of the 12 key EV components studied contain critical subcomponents that are not currently manufactured in India.
Semiconductors and rare-earth magnets remain among the biggest constraints to deeper localisation. These materials are essential for EV motors, power electronics, charging equipment and vehicle control systems.
China currently controls around 90% of global rare-earth magnet processing, while approximately 74% of global semiconductor manufacturing capacity is concentrated in Taiwan and East Asia. This concentration exposes India's EV supply chain to geopolitical and supply disruption risks.
MUST READ: India’s electric car penetration rising, hits 7% in May
Execution challenges
Government initiatives such as FAME II, the PLI Auto scheme and electronics and semiconductor incentive programmes have supported localisation efforts. However, execution remains a challenge.
Less than 10% of the ₹25,938 crore allocated under the PLI Auto scheme had been disbursed by early 2026, according to the report. Delays in domestic value addition certification and testing constraints at agencies such as ARAI and ICAT have slowed the pace of implementation.
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Value creation
The report argues that India's next phase of EV growth will depend on building capabilities in upstream materials, electronics and indigenous technologies.
It recommends accelerating semiconductor and rare-earth magnet supply chains, promoting component standardisation and increasing investment in research and development. Without strengthening these areas, India may achieve high levels of assembly localisation but fall short of capturing the full value of the EV supply chain.
As the country seeks to establish itself as a global EV manufacturing hub, the challenge will be not just producing components in India, but mastering the technologies and materials that underpin them.
MUST READ: Petrol, EV or Flex-Fuel? Here's which car makes most sense for your road trips in 2026
India could achieve 90-100% localisation across several high-value electric vehicle (EV) component categories by 2030, but the country's push for deeper self-reliance faces a major obstacle: dependence on imported semiconductors, rare-earth magnets and advanced materials.
According to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics, recent investments in powertrain systems, power electronics and charging infrastructure could help India significantly expand domestic manufacturing capabilities over the next five years.
Advertisement
Non-battery components
The report highlights that EV-specific systems excluding batteries—including motors, power electronics, thermal systems, chargers and vehicle control units—account for a significant share of vehicle value and present major localisation opportunities.
If announced manufacturing capacities are commissioned successfully and supplier ecosystems continue to mature, several of these component categories could achieve near-complete localisation by the end of the decade.
MUST READ: Mercedes-Benz VLE: World's first grand sedan is an 8-seat EV with 700+ KM range
India's EV market has grown nearly 14-fold since FY2020, reshaping the automotive value chain and creating new opportunities for manufacturers. Electric two-wheelers, three-wheelers, buses and passenger vehicles accounted for 99% of EV registrations in FY2026, underlining the rapid expansion of the market.
Advertisement
Localisation push
The report notes that localisation has progressed most strongly in segments that align with India's existing automotive manufacturing strengths. Structural components, wiring harnesses, suspension systems, braking systems and thermal systems have already achieved high levels of domestic sourcing.
Meanwhile, investments are increasingly being directed towards historically import-dependent areas such as traction motors, power electronics, motor controllers and charging systems. Companies including Bosch, Valeo, Nidec, Uno Minda and Exicom have announced or expanded manufacturing facilities for several critical EV components.
MUST READ: Citroën shakes up EV market with ë-C3X, introduces pay-as-you-drive battery model
About 60% of recent EV component manufacturing announcements have come from companies approved under the Production-Linked Incentive (PLI) scheme for automobiles and auto components.
Advertisement
Chips and rare-earth magnets
Despite the progress, the report warns that high localisation does not necessarily translate into high domestic value creation.
Many components assembled in India still depend on imported chips, rare-earth magnets and specialised materials. Around eight of the 12 key EV components studied contain critical subcomponents that are not currently manufactured in India.
Semiconductors and rare-earth magnets remain among the biggest constraints to deeper localisation. These materials are essential for EV motors, power electronics, charging equipment and vehicle control systems.
China currently controls around 90% of global rare-earth magnet processing, while approximately 74% of global semiconductor manufacturing capacity is concentrated in Taiwan and East Asia. This concentration exposes India's EV supply chain to geopolitical and supply disruption risks.
MUST READ: India’s electric car penetration rising, hits 7% in May
Execution challenges
Government initiatives such as FAME II, the PLI Auto scheme and electronics and semiconductor incentive programmes have supported localisation efforts. However, execution remains a challenge.
Less than 10% of the ₹25,938 crore allocated under the PLI Auto scheme had been disbursed by early 2026, according to the report. Delays in domestic value addition certification and testing constraints at agencies such as ARAI and ICAT have slowed the pace of implementation.
Advertisement
Value creation
The report argues that India's next phase of EV growth will depend on building capabilities in upstream materials, electronics and indigenous technologies.
It recommends accelerating semiconductor and rare-earth magnet supply chains, promoting component standardisation and increasing investment in research and development. Without strengthening these areas, India may achieve high levels of assembly localisation but fall short of capturing the full value of the EV supply chain.
As the country seeks to establish itself as a global EV manufacturing hub, the challenge will be not just producing components in India, but mastering the technologies and materials that underpin them.
MUST READ: Petrol, EV or Flex-Fuel? Here's which car makes most sense for your road trips in 2026
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