India's Electric Vehicle Market Poised for Explosive Growth, Faces Critical Mineral Challenges
A comprehensive new analysis from KPMG India reveals that electric vehicle sales in the country could surge to an astonishing 22 million units by the year 2035. The report, released on Monday, indicates that EV penetration is expected to exceed 50 percent across most vehicle segments, marking a transformative shift in India's automotive landscape.
Driving Forces Behind the EV Surge
The projected growth is attributed to a powerful combination of factors. Strong consumer demand for cleaner transportation options, rapidly improving supply chains, and supportive regulatory policies from both central and state governments are creating ideal conditions for electric mobility expansion. The government's FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme and various state-level incentives are particularly noteworthy in accelerating this transition.
The Critical Raw Material Challenge
Despite the optimistic projections, the KPMG report sounds a cautionary note about significant supply chain vulnerabilities. India's EV progress will depend critically on how effectively it addresses risks associated with essential raw materials including lithium, nickel, cobalt, and rare earth elements.
These minerals are required in substantially higher quantities for electric vehicles compared to conventional internal combustion engine vehicles. The report highlights that more than 70 percent of global refining capacity for these critical minerals is concentrated in just a few geographical regions, creating substantial geopolitical and trade risks that could disrupt India's EV ambitions.
Strategies for Securing India's EV Future
KPMG outlines several strategic approaches to mitigate these supply chain risks and reduce import dependence:
- Domestic exploration initiatives, including potential reserves identified in Jammu and Kashmir
- Substantial investments in mineral processing and battery recycling infrastructure
- Policies promoting local refining capabilities and long-term supply agreements with producing nations
- Increased research into alternative materials that could reduce dependence on scarce minerals
Expert Perspectives on India's EV Trajectory
Rohan Rao, Partner, Automotive and Lead–Electric Mobility at KPMG in India, emphasized the fundamental importance of raw material security: "India's EV ambitions hinge not just on manufacturing capacity but on securing the raw material backbone. Without reliable access to critical minerals, our transition to electric mobility faces significant headwinds."
Raghavan Viswanathan, Partner, Deal Advisory at KPMG, highlighted the investment imperative: "Strategic investments in exploration, refining, and recycling will be absolutely crucial to ensuring India's long-term competitiveness within the global EV ecosystem. This isn't just about vehicle production—it's about securing the entire value chain."
The KPMG analysis suggests that while India's electric vehicle market stands at the threshold of unprecedented growth, realizing this potential will require careful navigation of complex global supply chains and proactive development of domestic capabilities in mineral extraction and processing.
