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Mint
18-07-2025
- Automotive
- Mint
India to assess easing auto localisation norms after Chinese rare earth magnet crisis
For automakers fretting about the potential loss of incentives if they import fully built motors to skirt China's magnet export curbs, relief may be at hand. The Centre has asked testing agencies to check whether strict localization norms to claim incentives can be relaxed, three people aware of the development said. The heavy industries ministry has also asked these agencies to assess the likely impact of such a move, the people said on the condition of anonymity. 'The testing agencies have been asked to assess the potential impact on manufacturers and their localization, their domestic value addition (DVA). The Automotive Research Association of India (ARAI) will do the assessment to see if relaxations are necessary," one of the three people cited above said on the condition of anonymity. ARAI is an autonomous testing and certification agency set up by the automotive industry along with the government, and affiliated with the heavy industries ministry. Vehicles must have specific amounts of domestic content to be eligible for central incentives. With the Chinese clampdown on exports of rare earth magnets used in motors, automakers have considered importing fully-built motors instead, but that would breach the localization norms and cut off incentives; to avert this, the manufacturers had approached the Centre for relief. Four testing agencies—ARAI, International Centre for Automotive Technology (ICAT), Global Automotive Research Centre (GARC), and National Automotive Test Track (NATRAX)—have been notified under the schemes to assess localization levels and other criteria for manufacturers to claim benefits. The two central subsidy schemes are the Production Linked Incentive Scheme for Automobile and Auto Components (PLI-Auto) as well as the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme to subsidize electric mobility. Under the PLI-Auto scheme, 50% of the components used in a vehicle must be made in India. Implementation issues While the extent of the relief sought is still being discussed, even a temporary relaxation—as sought by the auto industry—would have a significant impact. The PM E-DRIVE scheme is set to lapse in less than nine months, making even short-term relief a big part of the scheme. On the other hand, the PLI-Auto scheme has a very high bar for localisation, making any deviation a major change in the way the scheme operates. One expert indicated that a revision of the norm could be tough to implement. "It is not easy to relax localization norms because you don't know where to stop and when to revert. Timeline relaxation can be considered, but a full localisation norm relaxation is difficult," said an industry consultant working with auto manufacturers. Even importing fully built motors may prove to be costly, apart from increasing reliance on China. According to Harshvardhan Sharma, group head for auto tech and innovation at Nomura Research Institute Consulting & Solutions India, the disruption in rare earth magnet supply—particularly neodymium-iron-boron (NdFeB) magnets—is increasingly forcing Indian automakers to look at importing fully assembled traction motors. 'This shift is both a cost and strategic concern," said Sharma. He said fully built motors attract a basic customs duty of 10% to 15%, whereas magnet imports or motor sub-components may fall within the 2.5-5.0% duty bracket. 'The delta in duties, combined with logistics and markup by motor OEMs, can increase the landed cost of motors by 18-25%," he said. 'Beyond cost, this dynamic increases India's exposure to supply concentration risks, particularly given China's control over 85% of global rare earth refining capacity. India's reliance on fully built motors effectively transfers part of the value chain and technological control offshore." The localisation criteria under PM E-DRIVE follow the phased manufacturing programme and list the components that manufacturers are allowed to import and mandate the ones that are to be made locally. Email queries sent to the ministry of heavy industries and the testing agencies on 14 July remained unanswered. Depleted stockpiles China's clampdown on rare earth magnets has thrown the Indian auto industry into a quagmire. Indian importers of rare earth magnets had rushed to buy the commodity at a premium, ahead of the Chinese curb on exports introduced in April, helping cushion the blow to the industry, Mint reported earlier. With those stockpiles almost depleted and no prospects of fresh magnet imports, Indian automakers are considering importing fully assembled components. Rare earth magnets, such as neodymium-iron-boron (NdFeB) magnets, are used in advanced automotive applications and are essential in components such as traction motors for electric vehicles. The Society of Indian Automobile Manufacturers had written to the ministry on 27 June, asking for a temporary relaxation of localisation norms in various government schemes like the PLI-Auto scheme and PM E-DRIVE, Mint reported on 7 July. The industry had explained the issue to the government and its testing agencies and sought relaxation of localisation norms under the two schemes, a second person aware of the development said. The industry's concern is that importing such assemblies will lower the localisation in zero-emission vehicles made by Indian manufacturers and push them out of the PLI-Auto scheme, the first official said. The scheme's focus on using locally manufactured parts to make zero-emission vehicles is to counter the dependence on the Chinese manufacturing ecosystem for critical components of EVs. The government plans to dole out about ₹2,000 crore in PLI-Auto disbursals in FY26, heavy industries minister HD Kumaraswamy said in an email interview to Mint, following disbursal of ₹332 crore in FY25. Under the PM E-DRIVE scheme, which has ₹10,900 crore to be doled out by FY26, automakers receive a reimbursement from the government for every electric two- and three-wheeler, ambulance, truck, and bus they sell at a discount. Testing agencies are critical in implementing India's clean mobility schemes. Under both PM E-DRIVE and PLI-Auto, every manufacturer has to get its vehicles vetted by at least one of the four testing agencies for localisation criteria.
Scroll.in
10-07-2025
- Automotive
- Scroll.in
Rivals speed ahead as Tata Motors lags in EV race
This article was originally published in Rest of World, which covers technology's impact outside the West. Until recently, Tata Motors had a dream run in India's electric-vehicle market. The first homegrown automaker to successfully launch an EV in the country, it quickly gained traction with vehicles across diverse price points. By 2023, Tata Motors had cornered most of the Indian market. Then came the speed bumps. Tata Motors' fleet sales plummeted from 26,000 in 2023 to 2,000 in 2024. Its market share eroded from about 70% in early 2024 to 53% this year. Rivals closed in. JSW MG Motor India, a joint venture between India's JSW Group and China's SAIC Motor, more than doubled its market share to 28% in 2025. It sold 3,765 EVs in May, while Tata Motors sold only 586 more, according to data from the Federation of Automobile Dealers Associations. Domestic auto giant Mahindra & Mahindra sold 2,632 EVs and registered a 343% year-on-year growth. Overall volumes continue to be small amid fluctuating demand in the Indian market. While the government aims for a third of all vehicles to be electric by 2030, EVs comprised only 2.5% of the 4.3 million cars sold in the country in 2024. Sales have grown to a modest 4% this year. The EV market is estimated to expand from $8 billion in 2023 to more than $117 billion by 2032. Tata lost its first-mover advantage because of 'innovative ways of selling by [JSW] MG', Puneet Gupta, director for South Asia at automotive intelligence firm S&P Global Mobility, told Rest of World. JSW MG's competitive pricing and battery-as-a-service model – which allows customers to lease or subscribe to EV batteries – gave it an edge in the Indian market. This signals a growing shift. As domestic and international electric carmakers try to win over India's cost-conscious buyers, the battle ahead hinges on value, not just slashed rates. Escalating price wars have triggered fears of a financial crisis in China's EV sector. But in India, the still-nascent segment is following a different trajectory, industry experts told Rest of World. India's increasingly well-traveled consumer prefers affordable EVs that can offer futuristic technology, good performance and reliability. 'It will not be a zero-sum game on pricing,' said Harshvardhan Sharma, a Gurugram-based auto tech and innovation expert at Nomura Research Institute. 'Pricing is one of the factors – the competition is evolving around a value-based differentiation rather than a race to the bottom.' Tata Motors aims to regain market leadership with a well-conceived product portfolio, new launches, and a renewed focus on improving after-sales service, according to its latest earnings report. Representatives from Tata and JSW MG did not respond to Rest of World 's requests for comment. The rate of adoption is still slow, Rajat Mahajan, partner and auto sector leader for South Asia at global consulting firm Deloitte, told Rest of World. 'And so, what is at play is: how can we get more customers aware of EVs, and get used to EVs.' Tata Motors tackled the challenge early on. In 2020, it introduced the Nexon, an electric SUV priced at Rs 14 lakh, which became India's most popular EV. In 2022, its most affordable hatchback, Tiago – which offered a range of 250 kilometers at a starting price of Rs 8.5 lakh – sold 10,000 units in one day. But JSW MG chipped away at Tata Motors' leadership with the Windsor – the country's best-selling EV since its launch in September 2024. With an introductory price of Rs 13.5 lakh – only slightly higher than a premium hatchback – the spacious car is able to compete with the bigger SUVs and sedans in the market. Much of Windsor's success is tied to JSW MG's introduction of the battery-as-a-service model in India, which gave the company a 'significant tactical advantage,' Sharma said. 'It allows the customer to decouple 50% of the acquisition cost of the product.' Such a service doesn't just reduce upfront costs, it also encourages adoption by mitigating customer anxieties about vehicle range and battery health. JSW MG has since extended the battery-as-a-service model to all its EV cars. These include the Comet – the company's smallest EV – relaunched in March at a starting price of Rs 4.99 lakh ($5,800). Tata Motors appears wary of battery-as-a-service for now. Its representatives argue the model is a 'market activation storyline' that gives the illusion of better affordability without significantly lowering the total cost of ownership. Earlier this month, Tata Motors launched its most advanced EV, the at an introductory price of Rs 21.49 lakh. Following JSW MG and Mahindra's lead, it offered a lifetime warranty on the vehicle's battery pack. The car is powered by a battery that is 'designed and manufactured in India', Anand Kulkarni, chief products officer for electric passenger vehicles at Tata Motors, said at the launch. The company may still be able to regain its stronghold. As US protectionism disrupts global supply chains and forces Chinese automakers to turn to other markets, the Tata Group – Tata Motors' parent company and one of India's largest conglomerates – is pursuing a self-reliant ecosystem, dubbed the ' Tata UniEVerse,' by leveraging diversified businesses. Tata Power operates a vast infrastructure with over 5,500 charging points; outsourcing giant Tata Consultancy Services provides advanced research and product design for car technology; Tata Chemicals is engaged in cell development and localized manufacturing; and Tata Motors Finance extends financing solutions for customers and dealers. Most EV companies tend to depend on Chinese batteries – Tata plans to change that. Its subsidiary Agratas is eyeing in-house production at a $1.5 billion plant in the western state of Gujarat, and a $5 billion battery gigafactory in the U.K. 'Nobody understands the EV industry in India today better than Tata,' Gupta said. 'EV is about the ecosystem; it's not only about car manufacturing.' Tata Motors is also expanding overseas with its EVs in emerging economies such as Mauritius and Sri Lanka. It tasted initial success with its 2021 entry into Nepal, a fast-growing EV market, but Chinese brands have since gained ground. In India, the competition is set to intensify as global players trickle in, albeit with uneven moves. As Tesla's long-pending entry takes shape, it has shelved assembly plans and opted to roll out imported cars. VinFast India, a subsidiary of Vietnamese EV maker VinFast, was expected to debut with premium SUVs this month, but its launch plans have been delayed due to lagging production and dealers dropping out. Although Chinese auto giant BYD has been operational in India for several years, the government has rebuffed its attempts to establish a local factory, citing national security concerns. Since BYD's cars are imported, they're more expensive than local competitors, limiting its market share. Domestic EV upstarts, meanwhile, are experimenting with compact models. This January, Vayve Mobility, a Pune-based startup, launched Eva, a two-seater EV that goes into production next year – it is expected to be India's cheapest electric car. The car aims to address urban mobility challenges for nuclear families, and offers a range of 250 kilometres. Prices across models start from Rs 3.25 lakh ($3,700). It has a solar-panel roof for charging, in addition to a standard port. The company plans to scale at a tempered pace and the car is currently sold out for the first year of production, Vilas Deshpande, co-founder and chief operating officer at Vayve Mobility, told Rest of World. EV startups have had limited success in India so far, with four legacy carmakers dominating 80% of the market, according to research firm Bernstein.
