EconSurvey
Need EV sector policy to de-risk supply chain, cut China imports
This story was originally published at 19:57 IST on 31 January 2025
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NEW DELHI – India's electric vehicle sector needs targeted policies to cut dependence on Chinese imports and de-risk the supply chains, the Economic Survey for 2024-25 (Apr-Mar) said. China holds global dominance in the EV sector, especially because 70% of rare earth minerals – critical resources for high-storage batteries — are processed by Chinese companies.
"Leading EV manufacturers have noted an increasing proportion of Chinese imports in their total material expenditures, reflecting a significant dependence on China for certain resources and technical know how," the survey, tabled in Lok Sabha on Friday, said. Policy to cut dependence on Chinese imports holds importance as demand for electric vehicles is set to increase going forward as India strides towards energy transition.
After the US and the EU imposed high tariffs on Chinese EVs in 2024, Beijing has shifted its focus to southeast Asian markets, including India. China contributes to 63% of global mining of rare earth minerals and 90% of global processing output. China also holds a dominant position in manufacturing of Lithium-ion batteries.
"Dependence on China-made goods to achieve that transition enhances the complexity of the challenge for India," the survey said, recognising that China has become a manufacturing colossus in the last six years. China is India's top import source. Imports from China grew 3.3% to $101.75 bln in FY24.
Currently, the government has implemented schemes like the Production-Linked Incentive Scheme, and the Faster Adoption and Manufacturing of Electric Vehicles subsidy in the EV sector. These schemes demonstrate the government's awareness of developing the supply chain, but future policies may have to broaden their scope of coverage, the survey said. End
US$1 = INR 86.61
Reported by Krity Ambey
Edited by Saji George Titus
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