This chapter delves into India’s integration into global value chains (GVCs) within the automobile and electric vehicle (EV) sectors. In the case of automobiles, the passenger car industry is one of the most successful cases of GVC integration. While India is a net exporter of automobiles, the parts that were exported and imported include the drive transmission steering and engine, indicating integration in value chains. This integration is bolstered by consistent policy support from the government, substantial foreign direct investment (FDI), the expanding Indian market, infrastructural enhancements, and favourable demand drivers. Nevertheless, challenges persist, exacerbated by Covid-19-induced supply chain disruptions, notably in physical infrastructure inadequacies (such as roads, water, and power) and logistical barriers (like port delays). Conversely, the auto industry and the EV industry are intrinsically related to each other, through the transition from auto to EVs. However, the two chains are indeed quite different. The electric vehicle value chain in India faces fragmentation due to limited access to raw materials (primarily critical minerals) and battery technology, with domestic battery production remaining nascent despite upcoming projects. Addressing this requires substantial investment in research and development (R&D) and infrastructure to expand domestic battery manufacturing capacity. Establishing a robust battery value chain entails addressing raw material procurement, cell manufacturing, module assembly, and innovations in cell chemistry. India’s gradual transition to electric vehicles, primarily in the two- and three-wheeler segments, is bolstered by supportive government policies at both central and state levels. The EV policies pursued by India include the use of incentives and subsidies through the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) and the Faster Adoption of Manufacturing of Electric Vehicles (FAME). However, significant barriers to GVC integration persist despite these efforts. The bigger question to ask is whether incentives are enough to aid the EV manufacturing process in India and help in integrating into the EV value chain.

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Auto and EVs: The Case of India

  • Saon Ray

摘要

This chapter delves into India’s integration into global value chains (GVCs) within the automobile and electric vehicle (EV) sectors. In the case of automobiles, the passenger car industry is one of the most successful cases of GVC integration. While India is a net exporter of automobiles, the parts that were exported and imported include the drive transmission steering and engine, indicating integration in value chains. This integration is bolstered by consistent policy support from the government, substantial foreign direct investment (FDI), the expanding Indian market, infrastructural enhancements, and favourable demand drivers. Nevertheless, challenges persist, exacerbated by Covid-19-induced supply chain disruptions, notably in physical infrastructure inadequacies (such as roads, water, and power) and logistical barriers (like port delays). Conversely, the auto industry and the EV industry are intrinsically related to each other, through the transition from auto to EVs. However, the two chains are indeed quite different. The electric vehicle value chain in India faces fragmentation due to limited access to raw materials (primarily critical minerals) and battery technology, with domestic battery production remaining nascent despite upcoming projects. Addressing this requires substantial investment in research and development (R&D) and infrastructure to expand domestic battery manufacturing capacity. Establishing a robust battery value chain entails addressing raw material procurement, cell manufacturing, module assembly, and innovations in cell chemistry. India’s gradual transition to electric vehicles, primarily in the two- and three-wheeler segments, is bolstered by supportive government policies at both central and state levels. The EV policies pursued by India include the use of incentives and subsidies through the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) and the Faster Adoption of Manufacturing of Electric Vehicles (FAME). However, significant barriers to GVC integration persist despite these efforts. The bigger question to ask is whether incentives are enough to aid the EV manufacturing process in India and help in integrating into the EV value chain.