EV, Battery and Auto-Component Manufacturing in India

Two distinct manufacturing opportunities are opening at once. The first is visible: vehicles, components, power electronics and battery packs are scaling with domestic demand and global OEM commitments. The second is harder: India still needs to localise the battery cell, the most valuable and technology-intensive part of the EV supply chain. That gap is the opportunity and the warning. The Advanced Chemistry Cell battery PLI has substantial policy support, but commissioned domestic cell capacity remains far below the original target, while the Auto & Auto-Components PLI is more developed, with incentives tied to advanced automotive technologies and domestic value addition. For a foreign EV, battery or component maker, the question is not simply whether India is attractive. It is where in the value chain to enter, whether the technology can be localised, and whether the structure can actually earn the incentive over time.

An EV entry into India is not one market-entry question; it depends on where the company sits in the value chain, and the structure follows from that, not from the subsidy.

The legal route may be a wholly-owned subsidiary, a joint venture, a technology licence, a contract-manufacturing arrangement, an OEM supply agreement or a state-incentivised manufacturing project. The mistake is to start with the subsidy. The correct starting point is the product, the customer, the technology and the localisation path.

• An EV OEM or vehicle maker is deciding whether to import, assemble, manufacture or source locally — its route runs through an India subsidiary, the import-linked manufacturing scheme, the Auto PLI, local manufacturing and distribution.
• A battery-cell maker is deciding whether India can support cell manufacturing at the chemistry, equipment and domestic-value-addition level the ACC scheme requires — usually through a technology licence or joint venture, with the ACC PLI and the Press Note 3 position central.
• A battery-pack, BMS or power-electronics supplier sits closer to the Auto & Auto-Components PLI and to OEM offtake — through component certification, supply agreements and transfer pricing.
• An auto-component or supply-chain manufacturer — motors, controllers, drivetrains, thermal systems, chargers, rare-earth magnets, electronics or precision parts — enters through the Auto PLI, state incentives, contract manufacturing and supply agreements.
• A battery-recycling or materials-recovery business reclaims lithium, nickel, cobalt and graphite from end-of-life cells and scrap — a fast-emerging entry point that the extended-producer-responsibility rules and the import-dependence of cell materials are actively pulling into being.

Cells are difficult because the chemistry, the process and the equipment are specialised and largely sit outside India. Battery-cell projects therefore often depend on foreign cell chemistry, process know-how or equipment, and a significant part of global lithium-iron-phosphate and cell-supply capability has a China connection. The established route has been a domestic group taking a technology licence or forming a joint venture with a foreign cell specialist. That makes the Press Note 3 question central rather than incidental: where the investor, the beneficial owner, the technology provider or the transaction structure has a land-border connection, Press Note 3 must be analysed before the structure is finalised, and because much of the relevant technology is of that origin, the structure and the technology-transfer arrangement have to be designed around it from the outset.

Two sector-specific compliance layers sit on top of the FDI and tax position and should be built into the plan. The first is product safety and homologation: electric vehicles and their battery systems must meet Indian automotive standards — notably AIS-156 (with AIS-038 Revision 2 for passenger-car batteries) for lithium-ion traction batteries, aligned with the UNECE R100 and R136 standards on thermal runaway, crash and electrical safety — with type-approval and testing through ARAI or ICAT before a product reaches the market. The second is battery waste and recycling: the Battery Waste Management Rules place extended-producer-responsibility obligations on producers, with collection, recycling and minimum recycled-content targets administered through the Central Pollution Control Board's EPR portal, and these obligations increasingly shape both cost and supply-chain design. Both are specialist, evolving and largely standard across producers; they are flagged here so they are designed in, while the general FDI, FEMA and tax positions are covered on the linked service pages, not repeated.

The state decision is part of the economics, because state incentives stack on top of the central schemes and the EV manufacturing map is already forming. Telangana has emerged as an anchor for large-format battery manufacturing; Gujarat hosts gigawatt-scale battery and vehicle investment; and Maharashtra, Tamil Nadu and Karnataka each combine established automotive clusters with their own EV policies. The right location turns on the state incentive package, land and power, proximity to OEM customers and the supply chain that feeds the plant, and the talent pool — and, as with every incentive-linked manufacturing decision, it should be chosen together with the regime and the incentive position, well in advance, not after.

ATB advises foreign EV, battery and component makers on entering India, and matches the structure to where the company sits in the value chain — OEM, cell maker, pack and power-electronics supplier or auto-component manufacturer — rather than to the headline scheme. We work the entity or joint venture and the route, the Press Note 3 and technology-licensing position at the centre of any cell or advanced-component deal, the ACC and Auto-PLI eligibility and value-addition plan, the import-scheme analysis where an OEM is weighing it, the state and location package, and the transfer-pricing and exchange-control structuring around it — built for the production-and-value-addition reality on which both schemes pay. The conversion point is simple: the opportunity is not the subsidy, it is structuring the entry so the technology, the approval, the localisation and the incentive all work together. For groups combining an India base with a Gulf presence, the decision sits within the India-UAE corridor the firm works across.