 "China's dominance in EV supply chain a concern, says Economic Survey")
The Economic Survey 2024-25, presented in Parliament on January 31, highlights concerns about India’s reliance on electric vehicle (EV) imports from China. This issue gains significance as the government encourages automakers to adopt mixed-powertrain technologies, including EVs and flex-fuel vehicles, to meet its net-zero emissions target.
“Electric mobility makes economic sense in a country which imports most of its oil and has abundant renewable energy and coal. However, it raises important challenges that need addressing. The import intensity of e-vehicle production – especially from countries with whom India has persistent and large trade deficits – is very high. The extent to which electric mobility is incentivised in the short run needs to keep this factor in mind,” says the Economic Survey 2025.
India’s dependence on Chinese imports
This development coincides with a policy shift in the United States, where President Donald Trump has overturned decisions made under Joe Biden’s administration concerning electric vehicles, including funding and allocations for charging infrastructure.
Similar to automakers in the US and Europe, Indian manufacturers remain heavily dependent on China for lithium-ion battery cells and other essential raw materials necessary for EV production. Between April and October 2024, China emerged as India’s largest import partner, with imports rising by 9.8 per cent to $65.89 billion, according to data from the Ministry of Commerce. The Economic Survey notes that “India sources 75 per cent of lithium-ion batteries from China”.
China’s dominance in mineral processing
“China commands a significant share of critical mineral processing and production globally. Across key commodities such as Nickel, Cobalt, and Lithium, China alone is responsible for processing 65 per cent, 68 per cent, and 60 per cent of the global output, respectively. Similarly, in the case of Rare Earth Minerals, China contributes to 63 per cent of global mining and 90 per cent of global processing output,” the survey mentions. Demand for lithium-ion batteries will expand at a compound annual growth rate (CAGR) of 23 per cent by 2027. It further emphasises China’s dominant position in this sector, stating, “The lack of viable alternative battery technologies reinforces China’s dominant position in Lithium-ion batteries.”
Need for indigenisation in EV production
The Economic Survey, prepared by Chief Economic Advisor V. Anantha Nageswaran and his team, underscores the need to localise raw materials and technology for EV production. “Indigenising the technology and raw materials for electric mobility is an urgent task. Given India’s vast size and limited land availability, public transportation is a more efficient alternative for viable energy transition. Therefore, national-level policies and local nudges must promote and facilitate its use, going beyond the focus on tailpipe emissions of private transportation choices,” it says.
To support the auto sector, the government has allocated Rs 3,500 crore under the production-linked incentive (PLI) scheme for automobiles and auto components in FY25. Additionally, it has introduced the PM-E Drive scheme — an extension of the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME) programme — with a financial outlay of Rs 10,900 crore until March 31.