India’s drive toward developing a robust electric vehicle (EV) supply chain faces formidable challenges, particularly for indigenous component suppliers navigating global competition and acute raw material scarcity. Speaking at the India EV Conclave, organised by Autocar Professional, Vikas Marwah, CEO of Lumax Auto Technologies, offered a stark, candid assessment of the road to localization, concluding that despite admirable governmental intent, the current ecosystem is hindered by a lack of central strategic direction.
For Indian Tier 1 suppliers like Lumax Auto, the task of competing against established global players becomes even more challenging, considering their lack of global scale as standalone entities.
The Semiconductor Scramble:
Lumax Auto has strategically avoided components like motors, battery packs, and wiring harnesses. Instead, their focus is on semiconductor resilience and the assurance of semiconductor supplies, identifying this area as “where the pain actually lies” said Marwah during the panel discussion. The crisis is complex, extending beyond traditional chips to precious materials like zirconium dioxide, a ceramic used in emission components that mimics like a semiconductor at high temperatures.
Compounding this difficulty, Marwah noted , is the necessary infrastructure for validating these parts domestically is absent. He revealed that finding the testing, validation, and performance standards for semiconductors is a huge challenge, forcing the company to rely on its Japanese Joint Venture (JV) partners or their Original Equipment Manufacturers (OEMs) for certification.
Towards Fabless and Mechatronics:
Regarding future policy, Marwah warned that strict mandates for getting government incentives, such as 50% gross domestic value addition, are not going to fly. Instead of focusing on restrictive localization targets, he argues that the growing size of the Indian market which is projected to expand from 5 million passenger vehicles today to 7 or 8 million by 2030, provides sufficient space for all players, driven primarily by electronification and premiumization.
The CEO proposed that India must pivot its localization strategy toward leveraging its existing strengths. Rather than aspiring to invest billions in capital-intensive chip manufacturing facilities (fabs), India should champion a “fabless” strategy, focusing on design and integration.
“Forget the chips, forget the fab world, come back to fabless. Think about designing those chips, integrating them well and then moving forward. That is something that India can do brilliantly.” the top executive highlighted before explaining that this involves prioritizing mechatronics, the integration of mechanical and electronic components, an area where India already excels.
Way forward
Ultimately, Marwah’s message was clear: “While the government is showing right intent and policy roll outs for EV world in coming years , we need to form a national EV council to make and foster a collaborative ecosystem with stakeholders that goes beyond assembly numbers and actually promotes innovation and self reliance” he said before signing off.