By the decade’s end, India is set to lead in lithium-ion battery exports and as costs drop and demand increases, the country may no longer need EV subsidies, says Minister Nitin Gadkari.
India is poised to become the world’s largest exporter of lithium-ion batteries by the end of the decade, stated Nitin Gadkari, Minister of Road Transport and Highways, at the Bloomberg NEF Summit on Thursday.
Addressing the future of the Indian EV sector, with this, Gadkari also suggested that the electric vehicle industry might no longer require subsidies amid concerns about electric vehicle incentives.
Despite the country’s early stages of production, the Union Minister expressed optimism that ongoing research and development in battery technologies will garner global recognition.
Furthermore, citing the growing increase in EV adoption in India, he indicated that costs have already come down, reducing the need for financial support. He emphasised that the current tax advantages—5% on electric vehicles compared to up to 48% on internal combustion engine vehicles, that benefit the electric vehicle sector.
He also stated that the sector might no longer need government support given the growth in electric vehicle manufacturing. This comes as the industry anticipates the introduction of the third phase of the FAME scheme, which has been crucial in encouraging the early adoption of EVs in India.
At present, India is in the initial phase of lithium-ion battery manufacturing, crucial for electric vehicles and renewable energy storage. The country relies heavily on imports from China, Japan, and South Korea for these batteries.
India’s battery manufacturing capacity is projected to reach between 100 and 1,500 GWh by the decade’s end. The government has introduced a ₹181 billion production-linked incentive (PLI) scheme to establish advanced chemistry cell (ACC) manufacturing facilities, aiming for a 50 GWh production capacity.
Companies like Amara Raja, Ola Electric, Exide Industries, Reliance Industries, and GODI India are setting up gigafactories to produce lithium-ion cells. This domestic production is expected to support electric vehicle adoption and localise the supply chain.
Battery costs, which account for about 40% of an electric vehicle’s price, present a significant barrier to wider adoption. Reducing these costs through local manufacturing could help overcome this hurdle.
Gadkari’s comments on subsidies left some ambiguity regarding whether he was referring to manufacturing or purchasing incentives under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme.
The FAME scheme is managed by the Ministry of Heavy Industries, which is expected to approve FAME 3 within the next one to two months. It will replace the temporary Electric Mobility Promotion Scheme (EMPS) 2024.
Electric vehicle adoption in India remains low, driven mostly by three-wheelers. The government targets 30% adoption by the end of the decade. The FAME scheme has been instrumental in providing demand incentives.
