NITI Aayog mulls EV policy review to reduce dependence on China

New Delhi: The NITI Aayog plans to review India's strong push to electric vehicles (EVs) running on lithium-ion batteries since about 75% of the lithium-ion imports come from China.

A section within the government feels that India should not rely heavily on China for lithium-ion and instead explore other green sources to power its future vehicles, said a senior official.

"Internal deliberations are on and the plan is to assess India's dependence on China for this critical component of EVs and its long-term implications on the economy," said the official, who did not wish to be identified.


The discussions assume significance in the wake of China considering prohibiting exports of certain rare-earth elements and high performance magnets which are used in EV motors. The move could lead to China's monopoly in EV motor manufacturing.

India has seen a significant surge in volume and value of lithium-ion imports, buoyed by increasing demand for EVs.

India's total lithium-ion imports surged to $2.31 billion in April 2022-January 2023 from $1.83 billion in the entire 2021-22. About 75% or $1.75 billion of these imports in the first ten months of 2022-23 were from China, followed by 10% or $248 million from Hong Kong, 9.3% or $216 million from South Korea and miniscule quantities from Vietnam and Singapore.

"In all likelihood, the imports from Vietnam and Singapore are actually being rerouted from China. Though we now notionally have lithium reserves, the high dependence on China puts industry at risk," an auto component industry executive said on condition of anonymity.

According to a recent report by the Global Trade Research Initiative, EV manufacturing in India will increase the country's dependence on China for raw materials, mineral processing and battery production, suggesting that there is a need for life cycle impact evaluation of the EV sector on jobs, pollution levels, imports and economic growth.

The report also highlighted that China has bought the largest lithium mines in Australia and South America, and it processes more than 60% of the lithium produced globally, besides 65% of cobalt and 93% of manganese.

While the Atomic Minerals Directorate for Exploration and Research is carrying out lithium exploration in Karnataka and the Geological Survey of India has undertaken exploration of various minerals, including lithium, experts said these are long gestation projects which will take several years before India becomes self-reliant in lithium-ion production to power its batteries.

India has also put in place a Rs 18,100 crore production-linked incentive scheme to manufacture advanced chemistry cells in the country in the next five years to become self-reliant and avoid any supply shocks in future.