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Beyond the EV India’s Next Automotive Chapter

India’s shift to electric mobility is becoming increasingly linked to the country’s broader ambitions for manufacturing, energy security and exports. Recent comments from senior government officials suggest that the policy focus is moving beyond simply increasing EV adoption towards building the infrastructure, supply chains and manufacturing capabilities needed to support the transition at scale.

The size of the automotive industry gives this transition considerable economic significance. India’s automotive sector contributes more than INR 22.75tn to India’s economy and around 15% of the country’s GST collections, Road Transport and Highways Minister Nitin Gadkari said in his address to the 66th annual convention of the Society of Indian Automobile Manufacturers (SIAM). SIAM data showed that passenger vehicle sales in the country reached a record 4.64 million units in FY2025-2026, up 7.9% y/y. Passenger-vehicle exports also reached a record 905,000 units, an increase of 17.5%.

Against this backdrop, the government is pushing the industry to accelerate electrification. At the SIAM convention Tarun Kapoor, adviser to Prime Minister Narendra Modi, called for a faster transition to electric mobility, citing India’s dependence on imported petroleum and heightened geopolitical risks. The industry must “move into electric in a big way,” Kapoor said, as cited by the Economic Times. He also suggested that further restrictions on internal combustion engine vehicles could emerge, particularly in urban areas.

The pressure is particularly strong in commercial vehicles. Kapoor identified trucks and buses as among the more challenging segments for electrification because of their continued dependence on diesel. He called for lower manufacturing costs, better financing models, battery swapping and improved charging infrastructure along highways. Electrifying the heavy vehicle fleet could significantly reduce fuel consumption and oil-import dependence, given these vehicles’ high mileage and fuel use.

EV adoption is already expanding rapidly. According to data from JMK Research & Analytics’ Statewise EV Market Dynamics in India whitepaper, India’s EV market recorded a CAGR of 50.6% between FY2022 and FY2026. Cumulative EV registrations crossed 8.05mn, while EV penetration increased from 2.55% in FY2022 to 8.19% in FY2026. EV adoption is broadening beyond established markets, the whitepaper said, with states such as Madhya Pradesh and Bihar recording strong growth and emerging as important markets. In FY2026 alone India registered around 3.5 million EVs, up nearly 25% y/y, according to figures cited at the SIAM convention.

The next challenge is infrastructure. Prime Minister Modi has highlighted the rapid expansion of charging infrastructure as an important enabler of EV adoption. At the SIAM convention, Heavy Industries Secretary Kamran Rizvi said that nearly half of mapped charging stations were non-functional, underlining the importance of reliability and utilisation alongside the headline number of chargers installed. The government is seeking greater involvement from automakers in addressing this issue and has identified 60 priority highway corridors where charging infrastructure needs to be strengthened.

Government support is also being directed towards charging infrastructure. Under the PM E-DRIVE scheme, INR 20bn has been allocated for the development of public EV charging infrastructure, including charging stations, battery swapping stations and battery charging stations. The government has also outlined plans for charging depots to support electric buses across 160 cities. As subsidies are eventually reduced, however, the commercial viability of these networks will become increasingly important.

At the same time, the government is seeking to make India a larger global manufacturing base. Commerce and Industry Minister Piyush Goyal has urged the automotive industry to look beyond the domestic market and use India’s expanding network of trade agreements to increase its global footprint. According to Goyal, nine trade agreements concluded over the past four to five years provide access to 38 developed countries representing a combined GDP of around USD 60tn, compared with around USD 10tn covered by agreements concluded before 2014.

Goyal has called on Indian manufacturers to move beyond simply exporting from India and establish a greater manufacturing presence overseas. “Now it is time that we go to the world. We start manufacturing across the world. We start making our footprint in developed countries,” he said, as cited by Fortune India. The message reflects a broader ambition to integrate Indian automotive companies and component manufacturers more deeply into global supply chains.

For the EV industry, this shift in manufacturing has implications beyond vehicle production. As the EV market scales, demand for batteries, power electronics, critical minerals and other components will also increase. Greater localisation could help strengthen India’s domestic supply chain and create opportunities for companies that can develop competitive capabilities in these areas.

For investors, the opportunity extends beyond EV manufacturing itself. As EV adoption grows, demand for charging infrastructure, batteries, components, energy management and digital services should also rise. However, the gradual reduction of government subsidies will put greater pressure on businesses to demonstrate commercial viability. This makes companies that can generate steady demand and high utilisation more attractive than those relying mainly on continued expansion in installations.

India’s EV transition is thus becoming part of a much broader industrial strategy. Strong domestic vehicle demand, rapidly increasing EV registrations, investment in charging infrastructure, deeper localisation and greater access to international markets could reinforce India’s position in the global automotive supply chain. The next phase will test whether policy support and market growth can translate into reliable infrastructure, commercially viable business models and globally competitive manufacturing capabilities.

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