India’s EV race heats up with big bets on localization

Industry leaders consistently emphasize that deeper localization of EV components—spanning batteries, motors, semiconductors, and power electronics—is crucial for reducing import dependence and building a resilient supply chain capable of supporting India's ambition as a global EV hub. Companies like Bosch are actively localizing motors and controllers for electric two-wheelers, leveraging government incentives such as PLI and PM E-DRIVE to enhance cost-efficiency and scale production. Meanwhile, Hyundai’s Tarun Garg advocates for bolstering domestic R&D and integrating software and engineering expertise to transform India from a mere vehicle assembler into a global exporter of comprehensive mobility platforms.

Micro, small, and medium enterprises (MSMEs) are recognized as vital cogs in the EV ecosystem, yet they face significant hurdles in technology upgrades and global supply chain integration. Industry voices call for enhanced policy and financial support to empower MSMEs, enabling them to increase domestic value addition and contribute meaningfully to the EV supply chain. This ecosystem development is further supported by calls for innovative financing models and regulatory simplification, which together aim to accelerate EV adoption and foster a competitive, scalable market environment.

As India’s EV market matures from policy-driven incentives to demand-driven growth, affordability and consumer confidence become paramount. JSW MG Motor’s Biju Balendran highlights that deeper localization of components is key to narrowing the upfront price gap between EVs and ICE vehicles, although battery cell production remains a localization challenge. Complementing this, the evolution of charging infrastructure from mere availability to dependable, user-friendly networks—exemplified by MG’s eHub digital platform—is critical to scaling adoption. Transparent communication about real-world range and predictable battery performance tailored to India’s diverse climatic and usage conditions is also essential to winning consumer trust.

Supply chain vulnerabilities, particularly dependencies on China and critical materials like rare-earth magnets and lithium, underscore the urgency of building a diversified and resilient EV supply ecosystem. Bosch’s experience highlights these risks, reinforcing the industry-wide consensus that localization efforts must be coupled with strategic supply chain risk management to safeguard India’s EV ambitions against global disruptions.

JSW Group's strategic acquisition of a 51% stake in Skoda Auto Volkswagen India marks a pivotal joint venture designed to accelerate EV production and localization in India. This partnership backs Volkswagen's $700 million India Main Platform (IMP), an EV architecture adapted from China’s CMP, focusing exclusively on mass-market electric SUVs for Volkswagen and Skoda brands. By excluding Chinese partners and luxury VW brands, the JV aligns tightly with India’s localization policies and import duty incentives, aiming to reduce import dependence and boost competitiveness in the burgeoning domestic EV market.

Volkswagen’s openness to ceding control in India, as evidenced by ongoing talks with JSW Group for a majority stake, reflects a strategic shift acknowledging the challenges global automakers face in scaling independently within the Indian EV landscape. Skoda CEO Klaus Zellmer emphasized that this partnership is crucial to share investment risks and drive growth, especially as VW prepares to launch clean-energy vehicles to meet stringent 2027 emission norms. This local-for-local approach not only enhances VW’s competitiveness but also leverages India’s cost-efficient manufacturing and skilled workforce to serve both domestic and export markets under free trade agreements.

JSW MG Motor India is aggressively pushing localization to scale production and reduce costs, targeting 70% localization of key models like the Windsor and Hector Tomahawk by the end of 2027. With plans to nearly double its production capacity from 110,000 units to 220,000 by early 2028 and eventually reach one million vehicles, JSW MG’s expansion is underpinned by strategic collaboration with Chinese automaker SAIC, especially as easing of India’s Press Note 3 restrictions opens avenues for fresh investment. However, the company highlights how high GST rates on PHEVs—currently at 40%—pose pricing challenges, underscoring the critical role of tax policy in making localized EVs more competitive and affordable.

Industry leaders consistently emphasize that a coordinated policy framework combining regulatory simplification, innovative financing, and targeted support for MSMEs is foundational to scaling India's EV ecosystem and achieving deeper localization. Beyond vehicle assembly, the government’s focus on fostering manufacturing capabilities in critical components such as batteries, motors, and semiconductors is essential to reduce import dependence and build resilient supply chains, thereby enhancing India’s competitiveness as a global EV hub.

JSW MG Motor India’s push for lower taxation on plug-in hybrid electric vehicles highlights how fiscal policies directly impact pricing competitiveness and localization ambitions. Parth Jindal’s call to reduce the 40% GST on PHEVs underscores the need for tax incentives to support domestic manufacturing growth, as the company targets 70% localization in its Windsor and Hector Tomahawk models by the end of 2027, steadily increasing local content each month.

The recent easing of India’s Press Note 3 restrictions marks a pivotal regulatory shift that unlocks fresh foreign investments, particularly from Chinese partner SAIC, which is instrumental to JSW MG’s aggressive expansion plans. This relaxation, coupled with government incentives, is enabling JSW MG to scale production capacity from 110,000 units to potentially one million vehicles, with phased capacity targets of 160,000 by March and 220,000 by January 2028, contingent on securing additional capital.

Automakers in India are aggressively pursuing market expansion through product diversification and enhanced localization to capture both domestic and export opportunities. Hyundai’s Tarun Garg underscores the strategic shift from merely exporting vehicles to delivering complete mobility platforms—including software, engineering expertise, and multi-powertrain solutions like CNG, hybrids, EVs, and hydrogen—tailored to India's diverse conditions. This holistic approach is complemented by a push for deeper domestic R&D in critical EV components such as batteries and power electronics, aiming to boost localization beyond simple import substitution and support sustainable scaling.

Tata Motors exemplifies a robust scaling strategy by expanding its EV portfolio across a broad price spectrum, from the affordable Punch.ev with an 8-10 month waiting period to the premium Sierra.ev, which also experiences strong demand. By ramping production from 9,000 to over 15,000 units monthly within a few months and planning new launches and refreshes in FY27, Tata is addressing supply constraints while targeting diverse consumer segments, thereby consolidating its 43% market share in India’s rapidly growing EV market.

Volkswagen is doubling down on India as a strategic growth and export hub by localizing production and expanding its product range to include the highly competitive sub-4-metre SUV segment, which accounts for about 28% of the Indian passenger vehicle market. Their India-specific SUV, developed on the MQB-A0-IN platform with strong localization and compliance to Indian standards, aims to bring global safety and quality to a wider customer base. CEO Thomas Schäfer highlights India’s cost-efficient manufacturing and potential to serve export markets, including Europe, especially if free trade agreements materialize, signaling a shift toward a 'local-for-local' model.

JSW MG is aggressively scaling both production capacity and product variety to unlock latent EV demand in India, targeting 70% localization by the end of 2027 and aiming to double plant capacity to 220,000 units by early 2028 with ambitions for further expansion. Their strategy includes launching diverse models like the locally made Hector Tomahawk in both battery-electric and plug-in hybrid variants, catering to varied consumer preferences while advocating for tax incentives to improve pricing competitiveness. As Parth Jindal notes, the EV market’s growth hinges more on supply expansion and product availability than on consumer demand, mirroring the SUV market’s explosive rise over the past decade.

Localization of critical EV components such as motors, motor controllers, and child parts has become a cornerstone strategy for companies like Bosch to enhance cost-efficiency and scale electric two-wheeler manufacturing in India. However, this push towards domestic production faces significant supply chain challenges, particularly concerning rare-earth magnets, lithium, and dependencies on China, which threaten the sustainability of EV growth. Concurrently, the development of charging infrastructure and battery-swapping networks remains insufficient, underscoring the need for robust government support schemes like PLI and PM E-DRIVE to catalyze ecosystem scaling and improve economic viability.

Advancements in charging infrastructure are increasingly focusing on enhancing reliability and user experience through digital integration, exemplified by MG’s eHub platform that allows users to locate chargers, check availability, reserve slots, and make payments seamlessly. This digital aggregation addresses a critical barrier to adoption by reducing uncertainty and improving convenience. At the same time, technological challenges such as real-world range transparency and effective battery thermal management remain pivotal, especially given the diverse climatic conditions in India that demand right-sized batteries and credible communication to build consumer confidence.

While Indian suppliers have made strides in localizing various EV components, battery cell production remains a notable gap, posing a significant supply chain bottleneck that impacts vehicle economics and scalability. Addressing this limitation is essential for achieving competitiveness and profitability in the rapidly evolving EV market, as emphasized by industry leaders like JSW MG Motor’s Biju Balendran, who highlight that without deeper localization in battery technology, the broader ecosystem’s growth could be constrained.