States in the Driver’s Seat

The report analyzes the role of Indian state governments in localizing the EV and battery supply chain, arguing that while central policies provide strategic direction, states control critical levers like land, power, and regulatory clearances. It finds that net localization for high-cost components like batteries and motors remains below 20%. The study categorizes 14 states into 'leading', 'aspirational', 'emerging', and 'differentiated' based on their policy strength and manufacturing competitiveness. Key recommendations include shifting toward indirect equity investment models to de-risk upstream battery production, establishing a design-linked incentive for R&D, and introducing phased zero-emission vehicle (ZEV) mandates to create demand certainty.

• India's domestic EV supply chain remains heavily dependent on imports, with net localization for high-cost components—including batteries, motors, DC-DC convertors, and on-board chargers—staying below 20%.
• Central government supply-side policies, such as the Production Linked Incentive (PLI) schemes for automobiles and advanced chemistry cells, are translating into investments but result in geographically dispersed manufacturing outcomes.
• State-level policies often lack deliberate coordination with central incentives, which limits the overall effectiveness of the incentive stack; Andhra Pradesh is the only state offering a structured top-up to central government incentives.
• The report categorizes 14 Indian states based on policy strength and competitiveness: 'leading states' (Tamil Nadu, Gujarat, Maharashtra) have strong fundamentals and policies; 'aspirational states' (Andhra Pradesh, Telangana, Haryana, Punjab) have strong incentives but lower competitiveness; 'emerging states' (Uttar Pradesh, Madhya Pradesh, Rajasthan) focus on downstream assembly; and 'differentiated states' (Karnataka, Odisha, Chhattisgarh, West Bengal) suit niche segments.
• Existing state and central policies are insufficient to de-risk midstream and upstream battery investments due to high capital and technology risks, as output-linked incentives like PLI only reward realized production.
• There is a significant gap in the skilled workforce for deep-tech EV manufacturing; current training focuses heavily on repair and maintenance rather than manufacturing, with only 2,151 enrolments in manufacturing-related courses compared to 65,422 in service roles.
• India lacks zero-emission vehicle (ZEV) mandates at both national and state levels, which 59% of surveyed industry respondents identified as the top supply-side enabler the central government could introduce to boost production.

APA

Raizada, S., Jain, S., Chandra, H., Moerenhout, T., Dua, M., & Dutta, P. (2026). States in the Driver’s Seat. International Institute for Sustainable Development. https://www.iisd.org/system/files/2026-04/policies-electric-vehicles-battery-manufacturing-india.pdf

Chicago

Raizada, Swasti, Saumya Jain, Hrishabh Chandra, Tom Moerenhout, Manish Dua, and Priyami Dutta. States in the Driver’s Seat. International Institute for Sustainable Development, 2026. https://www.iisd.org/system/files/2026-04/policies-electric-vehicles-battery-manufacturing-india.pdf.

Wikipedia

{{cite report |last1=Raizada |first1=Swasti |last2=Jain |first2=Saumya |last3=Chandra |first3=Hrishabh |last4=Moerenhout |first4=Tom |last5=Dua |first5=Manish |last6=Dutta |first6=Priyami |title=States in the Driver’s Seat |publisher=International Institute for Sustainable Development |date=April 2026 |url=https://www.iisd.org/system/files/2026-04/policies-electric-vehicles-battery-manufacturing-india.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{raizada2026states, author = {Raizada, Swasti and Jain, Saumya and Chandra, Hrishabh and Moerenhout, Tom and Dua, Manish and Dutta, Priyami}, title = {{States in the Driver’s Seat}}, institution = {International Institute for Sustainable Development}, year = {2026}, month = apr, url = {https://www.iisd.org/system/files/2026-04/policies-electric-vehicles-battery-manufacturing-india.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }