Innovation, research and development, and economies of scale represent the biggest challenges facing India’s automotive sector as it seeks to compete globally, Hanif Qureshi, IPS, Additional Secretary at the Ministry of Heavy Industries, said at the India EV Conclave on Tuesday.
In a candid assessment of India’s automotive competitiveness, Qureshi emphasized that “the real challenge is innovation and R&D to make products for different markets in the world,” while noting that both R&D spending and manufacturing scale need substantial improvement. Speaking at the two-day event organized by Autocar Professional at Hyatt Regency Delhi, he highlighted that while India has made significant strides in vehicle manufacturing, developing products tailored for diverse global markets requires significantly higher investments in research and development.
“Scale and R&D investments need to improve,” he stated, identifying these as critical factors that would determine India’s ability to transition from being primarily a domestic manufacturing base to becoming a global automotive powerhouse. The admission reflects a growing recognition within policymaking circles that cost competitiveness alone is insufficient for global success. Indian manufacturers must develop indigenous technologies and innovations that can compete with established global players.
India’s automotive R&D spending has historically lagged behind global leaders. While companies like Tata Motors and Mahindra & Mahindra have established significant R&D capabilities, the sector’s overall investment in research remains below international benchmarks. For context, leading global automotive companies typically invest 5-8% of revenues in R&D, while Indian companies generally spend 2-4%. This gap becomes more pronounced in the EV sector, where rapid technological evolution demands sustained innovation in batteries, powertrains, software, and charging systems.
Qureshi emphasized that achieving economies of scale is essential for reducing manufacturing costs and improving competitiveness. “Spending more on R&D and scale of operation has to be improved to push the cost of manufacturing lower,” he noted. The scale challenge is particularly acute in the EV sector. While India has achieved significant volumes in two-wheelers and three-wheelers, passenger EV production remains relatively modest. For 2025, battery electric vehicle production is projected to reach approximately 301,400 units—representing just 6% of total passenger vehicle production. Higher volumes would enable manufacturers to amortize R&D costs over larger production runs, reduce component costs through bulk procurement, and attract Tier-1 suppliers to establish local operations.
Qureshi outlined a comprehensive approach to enhancing competitiveness that extends beyond traditional manufacturing. He emphasized technology development with focus on indigenous innovation in critical areas like battery chemistry, electric powertrains, software-defined vehicles, and autonomous driving features. Skill development also emerged as a priority, with emphasis on training a skilled workforce capable of developing and manufacturing advanced automotive technologies. “The shift towards not only electric but also biofuels such as CBG, and also a focus on skilling together will make India competitive,” Qureshi stated.
Recognition that competitiveness requires proficiency across multiple powertrain technologies, including electric, biofuels, and hydrogen, was another key theme. Development of frugal engineering approaches that deliver global performance standards at competitive price points suited to emerging markets will also be crucial.
A key theme in Qureshi’s remarks was the need to develop products for “different markets in the world,” acknowledging that a one-size-fits-all approach won’t work. Indian manufacturers must tailor vehicles for developed markets by meeting stringent safety, emission, and technology standards of Europe, North America, and Japan. For emerging markets, they need to offer cost-effective solutions for price-sensitive markets in Africa, Latin America, and Southeast Asia. And for the domestic market, they must address India’s unique requirements including road conditions, climate diversity, and consumer preferences.
Battery technology represents a critical area where R&D investment is essential. Currently, India imports most of its lithium-ion cells, creating both cost and supply chain vulnerabilities. While the government’s PLI scheme for Advanced Chemistry Cells aims to establish 50 GWh of domestic battery manufacturing capacity, developing next-generation battery technologies—including solid-state batteries and sodium-ion alternatives—requires sustained R&D commitment.
The automotive industry’s transformation toward software-defined vehicles presents both challenges and opportunities for India. Developing competitive software platforms, connected vehicle technologies, and eventually autonomous driving capabilities requires substantial R&D infrastructure and talent—areas where India has inherent strengths through its IT sector.
Recognizing these challenges, the government has initiated several measures including Production-linked incentives for automotive components and ACC batteries, the National Automotive Testing and R&D Infrastructure Project (NATRiP) for establishing world-class testing and certification facilities, the Automotive Skill Development Council focused on building appropriate workforce capabilities, and Startup India support for automotive technology startups through funding and mentorship.
Major automotive players have announced significant R&D investments. Mahindra & Mahindra has committed ₹12,000 crore to its electric vehicle arm over three years. Tata Motors operates extensive R&D facilities in Pune and the UK. Maruti Suzuki and Hyundai have established R&D centers focusing on localized product development. However, industry experts acknowledge that these investments, while substantial, need to be scaled further to match global benchmarks, particularly as the sector transitions to electric and connected vehicles.
Qureshi’s comments suggest that building R&D capabilities doesn’t necessarily mean going it alone. Strategic partnerships with global technology leaders, collaborations with academic institutions, and leveraging India’s IT prowess for automotive software development could accelerate capability building. The Ministry has facilitated partnerships between automotive companies and startups, particularly in areas like battery technology, charging solutions, and vehicle connectivity.
The candid acknowledgment of R&D and scale challenges indicates a realistic assessment of India’s current position and the work ahead. Rather than claiming India has already achieved global competitiveness, policymakers are recognizing that sustained, focused effort on innovation and scale is necessary. “Innovation and R&D to make products for different markets in the world” will determine whether India can transition from being a manufacturing location to becoming an innovation hub in the global automotive industry.
The India EV Conclave, attended by over 300 industry stakeholders including technology leaders, academics, and policymakers, continues on Wednesday with technical sessions on battery innovation, charging infrastructure, and sustainable manufacturing practices.