As the global electric vehicle (EV) market undergoes a significant transformation due to tariffs and restrictions imposed on Chinese imports by the U.S., EU, and Canada, India finds itself at a crucial juncture according to the Global Trade Research Initiative (GTRI) report. While China, a major player in the global EV landscape, shifts its production to ASEAN nations and sees India as a potential market, India faces unique challenges that set it apart from other countries in the race to adopt EVs at scale.
China’s dominance in the EV sector is evident, having exported 1.6 million EVs worth USD 36.7 billion in 2023. However, Western nations, wary of China’s growing influence, have introduced heavy tariffs and duties to protect their domestic markets. The U.S. raised tariffs on Chinese EVs from 25% to 100%, while the EU and Canada have followed suit with similar restrictions. As a result, China is looking to other regions, including ASEAN nations and India, to maintain its production momentum.
Unlike other countries, India faces distinct hurdles in its path to EV adoption. With over 80% of its electricity generated from fossil fuels, the environmental benefits of switching to EVs could be limited unless the country simultaneously accelerates its transition to cleaner energy sources. Additionally, India risks deepening its reliance on Chinese EV components, as up to 80% of an EV’s cost is attributed to batteries and parts, mostly sourced from China.
To avoid becoming an “EV colony” for China, experts suggest that India should let its EV market evolve organically, driven by market forces rather than heavy incentives or dependence on Chinese imports. While India has reduced import duties on high-cost EVs to attract foreign investments, it must balance this by fostering domestic innovation and leadership in advanced battery technologies, such as solid-state batteries and hydrogen fuel cells.
The next few years will be critical for India in shaping its role in the global EV market. A balanced approach that emphasizes sustainability, clean energy, and technological innovation will be essential for India to navigate this evolving landscape without becoming overly dependent on China.
