India’s automotive industry is undergoing a major transformation, driven by growing demand for energy-efficient internal combustion engine (ICE) vehicles and electric vehicles (EVs), alongside the broader push for sustainable mobility solutions. However, rising costs of critical components and minerals are posing significant challenges to manufacturers.
According to GlobalData, the Indian advanced xEV battery market is projected to expand at a compound annual growth rate (CAGR) of 25.7% between 2026 and 2030, reflecting strong long-term growth potential despite short-term cost pressures.
Gorantala Sravan Kumar, Associate Project Manager – Automotive at GlobalData, stated that government initiatives promoting electric mobility, combined with increasing consumer awareness and demand for sustainable transport, are expected to drive expansion in the Indian traction battery market.
Recent data from the Society of Indian Automobile Manufacturers (SIAM) indicates shifting market dynamics. Passenger vehicle production rose 25.5% year-on-year in 2025. However, the industry is facing what analysts describe as a “clean environment” premium, as the costs of exhaust-treatment systems and battery-grade minerals escalate sharply.
Precious metals used in emission control systems have recorded significant price increases, with platinum prices rising 110% in 2025 compared to the previous year. Rhodium and palladium have also witnessed substantial hikes.
The traction battery segment mirrors this trend. Cobalt oxide prices surged 209% year-on-year, while refined cobalt rose 146%. Lithium carbonate, a key material for rechargeable batteries, recorded a 10% increase.
GlobalData notes that securing stable and cost-effective supplies of essential minerals will be critical for sustaining EV growth. The firm emphasises the need for collaboration between government and industry stakeholders to develop local supply chains and reduce import dependence.
The Indian automotive component industry, analysts say, is at a crossroads. While short-term cost pressures from commodities and semiconductors are compressing margins—particularly for EV manufacturers with high battery exposure—companies that proactively manage material costs, optimise product design and strengthen supply chain resilience could gain a competitive advantage in the evolving market landscape beyond 2026.
