Beyond Subsidies: India Targets Rare-Earth Chokepoints, Cybersecurity and Overseas Plants in Next EV Policy Phase

India’s electric vehicle policy is entering a critical transition, shifting focus from initial retail demand subsidies towards addressing systemic vulnerabilities in component supply chains, imported automotive software, and access to critical raw materials.

Speaking during a fireside chat with Autocar Editor Hormazd Sorabjee at the Autocar Professional EV Conclave in New Delhi on Tuesday, Dr Hanif Qureshi, Additional Secretary, Ministry of Heavy Industries, detailed how government strategy is changing as early-stage purchase incentives are phased out across vehicle categories.

Rare Earths, Cybersecurity and Global Factories

According to Qureshi, to break international supply chokepoints, India recently closed bidding for domestic production of sintered rare-earth magnets. The government received bids from 21 to 22 companies and will select five manufacturers. Commercial production is projected to begin within 18 months, give or take six months.

Addressing the high volume of imported automotive electronics, Qureshi issued an explicit warning regarding software vulnerabilities, citing past instances where unauthorised third-party applications gained remote control over vehicle functions. The Ministry of Road Transport and Highways (MoRTH) is currently collaborating with automakers to establish enhanced cybersecurity and data protection standards.

Moving beyond conventional vehicle exports supported by free trade agreements (FTAs), Indian manufacturers are beginning to establish assembly and manufacturing plants directly in foreign target markets. Qureshi identified this localised production footprint as essential for long-term global expansion under the “Make in India for the World” framework.

Furthermore, Qureshi highlighted that, with the 2020 Auto and Advanced Chemistry Cell (ACC) Production-Linked Incentive (PLI) schemes entering their final year, the Ministry is initiating consultations with automakers to design an updated policy framework focused on new supply chain realities rather than volume-only targets.

Battery PLI Delays and Component Localisation Gaps

Addressing progress under the government’s 50 gigawatt-hour (GWh) Advanced Chemistry Cell (ACC) PLI programme, Qureshi acknowledged that capacity rollout has lagged behind original timelines due to technology transfer challenges and extended testing cycles. However, manufacturing momentum is now picking up among both PLI beneficiaries and non-PLI commercial players.

On component indigenisation, domestic suppliers have successfully localised smaller traction motors for two- and three-wheelers, but heavy-duty traction motors for commercial vehicles remain an ongoing engineering challenge. To accelerate local intellectual property (IP) creation, the government is linking research funding through the Anusandhan National Research Foundation (ANRF) and the Capital Goods scheme, while also treating R&D expenditure as eligible investment under the Auto PLI.

Subsidy Sunset and Industry Realignment

Qureshi emphasised that direct purchase subsidies were always intended as temporary kick-starters. With subsidies already phased out for three-wheelers and nearing an end for two-wheelers, government support is shifting towards “ecosystem enablers”, including public charging infrastructure, financing mechanisms, rationalised tax structures, and trade agreements.

Automotive industry advocacy has shifted accordingly: manufacturers have largely stopped requesting purchase subsidies, refocusing their efforts on resolving inverted duty structures and regulatory bottlenecks.

Pragmatic Technology Neutrality

Reaffirming a multi-powertrain policy, Qureshi reiterated that the government remains technology-neutral. While battery-electric powertrains dominate urban last-mile mobility, long-distance transport will continue to rely on a mix of biofuels, flex-fuels, compressed natural gas (CNG), and hybrid systems under the National Biofuels Policy.

Revised 2030 Adoption Outlook

Qureshi outlined updated 2030 penetration estimates across vehicle segments.

Passenger cars are expected to reach 18% to 20% penetration by 2030, substantially exceeding NITI Aayog’s earlier 10% benchmark. Two-wheelers are projected to climb from current levels of 9%–9.5% to 25%–30%. Meanwhile, buses and commercial fleets currently stand at 7%–8%, with accelerated growth expected under the flagship PM E-Drive scheme.