India's Deccan Herald published an article on August 11 titled: "Why Our Electric Vehicle Industry Needs China's Advantage." The Indian government has set an ambitious goal for electric vehicle adoption, aiming to increase the proportion of electric vehicles in all passenger vehicles to 30% by 2030. Currently, electric vehicle penetration in India remains low, accounting for only 2.5% of total vehicle sales in 2024.

Given this, achieving the 2030 target will be no easy task. Despite low demand, the Indian government is attempting to boost electric vehicle manufacturing through a program that offers import tariff reductions and exemptions to automakers who invest at least $500 million in electric vehicle production facilities in India and meet domestic value added (DVA) standards.

However, amidst its efforts to develop the domestic electric vehicle industry, the Indian government has explicitly resisted the entry of Chinese companies into the domestic market. Most notably, Chinese electric vehicle giant BYD faced investment blockages in India. BYD initially proposed investing $1 billion in a joint venture with an Indian company to build an automobile factory, but the Indian government rejected the proposal, citing "national strategic interests." BYD recently encountered obstacles in obtaining work visas for its executives traveling to India.

Rather than perpetuating this dispute, India should leverage China's expertise in electric vehicles, batteries, and charging infrastructure to accelerate domestic innovation and increase electric vehicle adoption. The challenges facing India's electric vehicle industry offer opportunities for collaboration between Indian and Chinese electric vehicle manufacturers.

Beyond policy ambition, India needs to invest in infrastructure, technology, and manufacturing capacity to increase electric vehicle adoption. One reason for the slow adoption of electric vehicles in India is range anxiety among car buyers. Other factors also contribute to Indian consumers' preference for traditional internal combustion engine vehicles, including the higher cost of electric vehicles, safety concerns about battery technology, and a limited range of models. Indian consumers' affordability of electric vehicles is also constrained by higher input costs, a direct consequence of India's reliance on imported components.

Although the Indian government has attempted to address the imported component issue through the Scheme for Promotion of Electric Passenger Vehicle Manufacturing in India (SPMEPCI), the program's stringent requirements have prevented electric vehicle manufacturers from applying for import duty exemptions. In contrast, some Indian state governments have introduced more comprehensive policies to develop the electric vehicle industry, offering not only land subsidies, tax breaks, and employee recruitment incentives, but also expedited approval processes. For example, Tamil Nadu supports businesses hiring local employees with employee provident funds.

China's electric vehicle industry is already well-established globally, offering valuable expertise to India in areas such as battery technology, vehicle design, and manufacturing efficiency. Selective collaboration with Chinese companies, particularly through joint ventures to build charging infrastructure or component partnerships, can help Indian companies overcome challenges in popularizing electric vehicles.

Regardless, Indian automakers remain reliant on imports of batteries and other components from China. 75% of all battery imports to India between 2023 and 2024 were projected to originate from China. Manufacturers with the best-selling electric vehicle models in the Indian market, such as the Tata Group, also rely on Chinese technology.

Encouraging Indian companies to collaborate with technology-intensive component manufacturers to build factories in India would not only help reduce imports but also facilitate technology transfer in manufacturing. Examples abound: American automakers like Ford and Tesla are collaborating with Chinese company CATL to build factories in the United States, while Japanese automaker Toyota is jointly producing electric vehicles with Chinese company BYD. India's reluctance to accept Chinese investment has prompted Chinese companies to explore other markets in Asia and Europe. Meanwhile, driven by innovation in the private sector, China is rapidly expanding its domestic electric vehicle charging infrastructure. For example, BYD is building "megawatt flash charging" fast-charging facilities in China, while CATL and Geely are developing battery swap networks. Collaboration with these Chinese companies would not only help India adopt these technologies but also expand its domestic electric vehicle infrastructure.

The Indian government think tank, the National Transformation Council, recently recommended that India relax its scrutiny of Chinese investments to avoid transaction delays. The key balance lies in fostering partnerships between India and China that strengthen India's domestic production capacity, as demonstrated by the joint venture between JSW Group and SAIC Motor.

Over time, such manufacturing collaborations could not only expand India's domestic component supplier base, but also create new business opportunities for small and medium-sized enterprises (SMEs) and significantly enhance India's technological capabilities in the clean mobility sector.