By Amit Kapoor, Chair, Institute for Competitiveness
The familiar case for electric mobility in India is built on energy security, and there is nothing wrong with it except its modesty. It asks what the country stands to lose and how barrels are priced in other capitals. Instead of focusing on a trade balance shaped by distant conflicts, we should concern ourselves with what we stand to build. A transition on this scale is not just a defence against the oil price; it is a decision about which industries India will own, whose supply chains it will sit inside, and what its roads, grid, and labour force will look like once the century’s energy order has settled.
The dependency is worth stating plainly, because it is the floor beneath everything else. India imports close to 90% of its crude and commits roughly a quarter of its import bill to the purchase, and it burns almost all of that fuel moving people and goods. The price of nearly everything the country makes and ships is therefore set somewhere else, by decisions in which it has no say. Electrification changes the terms of that exposure by substituting a fuel India must buy for electricity it can increasingly make.
Electric vehicles (EVs) removed around 1.7 million barrels of daily oil demand worldwide last year. Within India, the International Energy Agency notes that the transition seems to be happening from below as its scooters, autorickshaws, and other two- and three-wheelers displaced more than twice as much oil as its electric cars did. The vehicles doing the strategic work are not the ones in the showroom windows. They are the humblest on the road, where electric three-wheelers already make up close to 70% of their segment.
While energy security is vital, the more consequential argument is about what the same transition builds, and it begins with an observation about the money itself. Of all the things an economy can spend a dollar on, imported oil is among the least rewarding — a barrel is bought, burned, and gone, employing almost no one and leaving nothing behind. A battery and a motor are its opposite, among the most employment-intensive things a modern economy makes. Every rupee turned from the fuel pump towards domestic production is thus a rupee moved from a supply chain that hires few Indians to one that could hire many. The market for high-value components alone is reckoned at more than `2 lakh crore by 2030, and India has begun to arrange itself to capture it, committing production-linked incentives of over `44,000 crore to cells and vehicles and making its first serious attempts to manufacture the battery cell at home rather than import it.
The ambition can also extend beyond borders, and this is the part the domestic debate tends to miss. The next great expansion of electric demand is coming not from the wealthy markets but from the emerging ones, where sales across Southeast Asia, Latin America, and India are set to approach 3 million units this year. What those markets will buy are precisely the small, inexpensive EVs India already makes well. A country that supplies the world’s two- and three-wheelers is no longer merely defending its own energy security, but it is also selling into everyone else’s. The transition, framed this way, is an industrial opening as well for India.
There is one more link in the domestic chain, and it runs through the power system. India has promised 500 gigawatts of clean generation by 2030, most of it solar, which arrives at midday, in volumes the grid cannot always absorb. A nation of EVs is, in aggregate, the storage that ambition currently lacks. Charged when the sun is high, and in time able to return power when demand peaks, the fleet turns a daily surplus into a working asset. The loop this closes is the point. Indian sunlight, converted on Indian rooftops, moving Indian goods in vehicles built in Indian factories. This is not an energy policy with industrial side effects, but the outline of the first self-sufficient transport system the country has ever had.
All of this would matter in any decade. What makes it strategic is the decade India happens to be in. The world that rewarded buying from whoever sold cheapest is now turning against any kind of dependence. Almost a fifth of India’s crude passes through a region in open crisis. In 2025, China showed it could idle Indian assembly lines within weeks by tightening rare earth exports, proof that a supply chain can be squeezed as easily as a sea lane. Tariff walls are rising across the emerging markets even as three out of five electric cars sold there arrive from China. In such a world, security means owning what you cannot afford to lose. That is what converts India’s convergence into strategy. The industry, the jobs, the grid, and the cleaner air are each worth having on their own, but in an uncertain world each one also doubles as insurance.
Two conditions still separate the case from the advantage. China supplied roughly 60% of the battery capacity that entered the world’s EVs last year, while India’s flagship cell programme has commissioned only 1.4 gigawatt hours against its target of 50. A lender still cannot value a used battery, so the drivers carrying the transition borrow at rates that can reach a third of the loan.
Yet the two weaknesses are one object seen twice. The used battery no financier can price is, in its second life, exactly the storage the solar grid is waiting for. Certify its health, build a market for its resale, and every loan becomes cheaper while the grid gains storage from the fleet itself. India cannot drill its way to advantage, but it can build its way there, and it has started, from the rickshaw upward. If the links and the ecosystem are strengthened the EV transition can enable a larger system-wide transition.
With inputs from Meenakshi Ajith, Development Policy Lead, Institute for Competitiveness
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.
