Comment on India’s dependence on imports for the electric vehicle market from China. What should be India’s strategy to beat the Chinese influence over the EV market?

Climate change is once again in the spotlight as COP27 gets underway in Egypt. The global effort to reduce carbon emissions relies heavily on electric cars (EVs). The switch to EVs is essential in India, which is grappling with major air pollution challenges. However, there is a supply chain risk for electric vehicles because of the monopoly of China in the EV sector. The latest threats across the Taiwan Strait should serve as a wake-up call to the rest of the globe. The risk could be even greater given India’s tense relationship with China.

Reasons behind dominance of China in EV sector:

• The International Energy Association recently released research that found that the whole EV supply chain is heavily concentrated, mostly in China. 
• Lithium, nickel, cobalt, and graphite are the main materials needed for battery production. China accounts for 80% of the world’s mining production in graphite. Two-thirds of the world’s cobalt supply is mined in the Democratic Republic of the Congo, and Chinese corporations dominate that nation’s mining.
• China accounts for more than 60% of lithium processing, 70% of cobalt processing, 80% of graphite processing, and around 40% of nickel processing. 
• Three-quarters of the world’s cathodes and two thirds of the anodes are produced in China. 
• 70% of battery cell production worldwide is done in China. 
• An estimated 50% of the world’s EV production is in China.

Countering China:

• Accelerating the process of purchasing vital minerals from foreign mines is the responsibility of KABIL, a recently established government enterprise that is a joint venture of three PSUs that deal with minerals and metals. 
• A different approach is to relax domestic exploration regulations, compare them to international best practices, and welcome foreign companies to explore for and mine in India.
• It is critical to form supply alliances with nations other than China, as has been done with Australia.
• R&D spending must increase significantly at higher points in the value chain, starting with battery cells. 
• Creating a thriving startup environment and public-private partnerships.
• As startups are more likely to be innovative than legacy firms, they must be capitalized on.

Way forward:

In any case, given our experience with oil, India should not be dependent on imports for any aspect of the energy transition, including EVs. India should concentrate on creating the necessary environment for the production and supply chain of EVs while enhancing its current programmes.

Topics: GS-II: Government Policies and Interventions for Development in Various Sectors • GS-III: Indigenization of Technology and Developing New Technology