Author: PPD Team Date: 06/03/2025
The Ministry of Heavy Industries (MHI) has mandated a 100% domestic content requirement (DCR) for 18 electric vehicle (EV) components across two-wheelers, three-wheelers, and e-buses. This requirement must be met for manufacturers to qualify for subsidies under the PM E-Drive programme.
The phased manufacturing programme (PMP) eligibility criteria have been updated to ensure that original equipment manufacturers (OEMs) produce these components locally. The PM E-Drive initiative, with an outlay of Rs 109 billion, aims to provide demand incentives, deploy EVs, and develop charging infrastructure. Testing agencies will issue separate guidelines to assess the domestic manufacturing of EV components. Additionally, the import of battery modules, PMP components, and other EV components in complete knockdown (CKD) form from a single supplier has been prohibited. Each component will undergo PMP verification within an integrated unit.
The MHI has also extended the DCR requirement for multiple two-wheeler and three-wheeler components until May 1, 2025. These components include traction battery packs, battery management systems, DC-DC converters, vehicle control units, onboard or external portable chargers, traction motors, traction motor controllers (including inverters), and instrument clusters. The cost of external chargers for two- and three-wheelers must be included in the vehicle’s ex-factory price.
For e-buses, compliance deadlines for PMP components have been revised to six months from the amendment issue date. The components covered under this requirement include heating, ventilation, and air conditioning systems, electric compressors for brakes, charging inlets with CCS2 (combined charging system for AC and DC charging), traction battery packs, DC-DC converters, vehicle control units, traction motors, and instrument clusters.
The amendment also mandates the domestic manufacturing of the traction motor controller, including the inverter, with the integration of assembled printed circuit boards. Compliance deadlines for manufacturing battery management systems, traction motor controllers, and inverters have been extended to 12 months from the amendment date. The extension applies to assembling electronic components, semiconductors, and connectors on printed circuit boards.
Our Take
While the DCR mandate aligns with India’s goal of becoming a global EV hub, the transition must be managed carefully. Without sufficient domestic capacity, this policy could lead to cost increases for EV manufacturers, which may be passed on to consumers. The success of this policy will depend on strict compliance checks, incentives for local suppliers, and investments in raw material sourcing, particularly for battery cells and semiconductors. If these issues are not addressed, the localisation push could slow down EV adoption instead of accelerating it.