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The Economic Survey has urged policies to indigenise energy sources for electric vehicles, which focus on de-risking supply chains and promoting a self-reliant ecosystem powered by increased R&D in advanced battery technologies, such as Sodium-ion and Solid-State Batteries.
The survey drafted by chief economic advisor V Anantha Nageswaran noted that India presently exports 75 per cent of lithium-ion batteries from China, and has near negligible production capacity for key components like polysilicon, ingots, and wafers.
In 2024, EV sales in India crossed 14.08 lakh units achieving a market penetration rate of 5.59 per cent, up from 4.44 per cent in the previous year.
China’s rise in the global auto market has disrupted the long-term incumbents in economies like Germany and Japan, and it dominates the global distribution of critical minerals and other economic resources, creating potential dependencies for posterity, the survey noted.
The Ministry of Mines has analysed the 33 critical minerals vital to India’s economic security and found that 24 are currently at high risk of supply disruptions. China commands a significant share of critical mineral processing and production globally, it added.
Moreover, lithium-ion batteries will dominate other technologies for quite some time, and their demand is expected to grow at a CAGR of 23 per cent by 2030, which China currently processes 60 per cent.
Apart from supply chain resilience, the EV segment also faces GST disparity, noted Pulkit Khurana, Co-Founder of Battery Smart. Elaborating in this, he said, “While EVs with lithium-ion batteries are taxed at 5 per cent GST, standalone batteries face a significantly higher rate of 18 per cent.”
Additionally, electrical components are taxed at 12 per cent and 18 per cent GST and mechanical parts at 28 per cent, while the final vehicle is taxed at 5 per cent to encourage adoption. A more consistent GST structure across components could help streamline operations, said Avinash Sharma, Co-Founder and CEO, of ElectricPe.
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