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India’s auto industry races towards localisation amidst electrification and policy shifts, ET Auto - Awaj Ludhiana Ki
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India’s auto industry races towards localisation amidst electrification and policy shifts, ET Auto

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February 8, 2025
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India’s auto industry races towards localisation amidst electrification and policy shifts, ET Auto
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<p>We aim to achieve25% localisation in the coming years, this is of the total that we had projected four years, the industry is working towards it'' he adds.</p>
We aim to achieve25% localisation in the coming years, this is of the total that we had projected four years, the industry is working towards it” he adds.

The Indian automotive industry stands at a crossroads, balancing rapid growth, localisation efforts, and the transition to new technologies such as electric vehicles (EVs), and flex-fuel engines. While the government’s Aatmanirbhar Bharat initiative has significantly enabled domestic production, reducing reliance on imports, the surge in electrification and stricter emission norms has created new procurement challenges—especially in the electronics sector. Over the past four years, India has significantly ramped up localisation efforts under the Aatmanirbhar Bharat initiative, reducing dependency on imports. The industry has successfully localised approximately ₹18,000-20,000 crore worth of materials that were previously imported. However, despite this progress, net imports have increased by ₹11,000 crore, primarily due to the influx of EVs, Bharat Stage 6 (BS6) regulations, and the introduction of advanced automotive technologies.

”We had set a target of reducing net imports by 3-5%, but we exceeded expectations and achieved 6.8%. This was possible because of strong collaboration between OEMs and suppliers,” says Sachin Kulkarni- Co-Chairman, SIAM Aatmanirbhar Bharat Sourcing Group, and Executive Director and Board Member – Corporate Procurement, VW Group India. ”However, with new powertrains and futuristic vehicles entering the market, localisation remains an ongoing challenge. We aim to achieve25% localisation in the coming years, this is of the total that we had projected four years, the industry is working towards it” he adds.

While the localisation of sheet metal, forging, castings, machining, and plastic parts has been largely
successful, electronic components remain the biggest hurdle. “Electronic components remain the biggest challenge, with India still heavily reliant on imports for semiconductor chips and other critical parts,” says Kulkarni.

Recognising this gap, the government has introduced incentives for chip manufacturers and is working to establish a robust electronics manufacturing ecosystem in India. “Many global suppliers are now being encouraged to either manufacture locally or collaborate with Indian firms to ensure steady supply chains. As volumes increase, the expectation is that these critical components will also see greater local production,” says Kulkarni.

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<p>India currently lacks a dedicated centre for high-quality extraction, but discussions are underway to establish such facilities to support the<br>transition to a circular economy.”<span class=
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The Electrification Push and Supplier Readiness

India’s auto industry has been one of the fastest-growing globally, bouncing back strongly post-pandemic. In 2024, India recorded sales of 2.24 million vehicles, nearly doubling pre-COVID numbers. Projections indicate that by 2030, the market could reach 6 million units, driven largely by EV adoption and government initiatives.

Highlighting that the Bharat Mobility Global Expo 2025 was driven by most OEMs actively displaying new EV models, Kulkarni expresses, “Battery cell prices are declining, making EVs more viable and indicator of big localisation shift. However, the industry acknowledges that electrification will take time to reach mass adoption. To meet carbon reduction goals and Corporate Average Fuel Economy(CAFE) norms, manufacturers are pursuing a multi-pronged strategy—developing EVs, hybrids, and flex-fuel vehicles simultaneously.”

Sustainability and Recycling: The Next Big Push

Sustainability has become a key priority for Indian automakers. Efforts are underway to build a robust ecosystem for vehicle recycling, scrappage, and material reuse. While markets such as Germany have well-established recycling centres for extracting high-quality materials, Kulkarni shares that India is still in the early stages of setting up similar facilities.

Within the next 2-5 years, we expect Indian industries to ramp up their use of recycled and reusable materials, says Kulkarni. Collaboration with IITs and government institutions is helping find new
sustainability solutions for the sector.

Speaking on battery recycling, Kulkarni points, “One of the biggest challenges is the recovery of black mass—the critical material extracted from used EV batteries. India currently lacks a dedicated centre for high-quality extraction, but discussions are underway to establish such facilities to support the
transition to a circular economy.”

BS7 – The Policy and Regulatory Evolution

With Bharat Stage 7 (BS7) emission norms already in discussion, the auto industry is preparing for another shift. While the transition from BS4 to BS6 was drastic, moving from BS6 to BS7 is expected to be smoother. “Industry leaders are closely watching Euro 7 regulations, which could influence India& future policies,” Kulkarni exclaims.

At the same time, concerns over tailpipe emissions and carbon footprints are shaping future regulations. Automakers are adopting a mix of hybrids, flex-fuel, and EVs to align with these norms while ensuring affordability and availability for Indian consumers.

“As India moves toward a future dominated by cleaner, more localised automotive manufacturing, the road ahead is challenging yet promising. With the right mix of government support, supplier collaboration, and technological advancements, the country is poised to become a global leader in
sustainable mobility,” shares Kulkarni.

  • Published On Feb 8, 2025 at 03:50 PM IST

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