India’s electric vehicle sales are projected to reach 22 million units by 2035, with penetration crossing 50 per cent across most vehicle segments, according to a report by KPMG Assurance and Consulting Services LLP titled “Securing the Supply Chain: Preparing for the Electric Vehicle Raw Material Challenge.”
The report analyzes the critical mineral supply chain challenges facing India’s EV transition and outlines strategies for building resilience. EV sales reached approximately 1.5 million units in FY25, with penetration rising from 0.7 per cent in 2020 to 5.9 per cent in 2025.
The two-wheeler segment dominates the EV market with 80-85 per cent of sales due to affordability and ease of use in urban areas. The passenger vehicle segment is gaining momentum, with premium electric vehicles having driving ranges exceeding 500 kilometers capturing roughly 27 per cent of segment sales by mid-2025.
EVs currently offer total cost of ownership advantages over internal combustion engine vehicles in several categories, including scooters, three-wheelers, and intracity buses. For four-wheelers, cost parity has been achieved for commercial usage and is expected for personal vehicles before the end of this decade.
Public charging infrastructure has expanded from roughly 5,000 stations in 2022 to over 26,000 by early 2025. Government programs including FAME and PM E-DRIVE, launched in September 2024 with INR 10,900 crore funding, have been instrumental in driving adoption.
The report identifies significant supply chain vulnerabilities for critical minerals required for EV batteries and motors. On average, EVs require six times more mineral inputs than conventional vehicles, primarily due to battery systems.
Global reserves of key battery minerals are highly concentrated geographically. Lithium is sourced primarily from Australia, Chile, and Argentina, while cobalt and nickel come predominantly from the Democratic Republic of Congo and Indonesia. China controls 70-80 per cent of lithium and cobalt refining, 30 per cent of nickel processing, and nearly 90 per cent of rare earth element separation.
Recent Chinese export restrictions on critical minerals underscore supply risks. In December 2024, China banned exports of gallium, germanium, and antimony to the U.S. and imposed stricter restrictions on graphite exports. In February 2025, controls were expanded to include tungsten, tellurium, bismuth, indium, and molybdenum. In April 2025, export controls were introduced on seven rare earth elements.
Price volatility presents another challenge. Over the past five years, lithium, cobalt, and nickel prices experienced sharp fluctuations due to geopolitical tensions, pandemic-related disruptions, and surging demand. After rising eight times during FY22, lithium prices have declined by more than 80 per cent since 2023.
India possesses mineral-bearing resources for lithium, cobalt, and nickel but lacks proven reserves and large-scale processing capabilities. Lithium resources of 5.9 million tons have been identified in Jammu & Kashmir, though these are in the inferred category. The country has estimated mineral-bearing resources of 45 million tons of cobalt and 189 million tons of nickel.
For rare earth elements, India holds the third largest reserves globally after China and Brazil, but production accounts for less than 1 per cent of global output, and processing capacity is minimal.
The report outlines global mitigation strategies focused on supply chain diversification, recycling, and material innovation. Countries including the U.S. and EU are expanding local mining operations, building refining facilities, and incentivizing investments through tax credits and subsidies.
Technological innovation is addressing resource constraints. Lithium Iron Phosphate (LFP) batteries increased from under 10 per cent market share in 2020 to nearly 50 per cent by 2024, reducing reliance on cobalt and nickel. Sodium-ion batteries, which eliminate lithium, are emerging for low-cost EVs and grid storage, while solid-state batteries are expected to enter commercial production by 2027.
In motor technology, developments in magnet-free designs such as wound rotor synchronous motors, synchronous reluctance motors, and switched reluctance motors are reducing dependence on rare earth elements.
India’s Strategy
The report recommends a four-pronged strategy for India combining short-term measures for supply security with medium and long-term initiatives for domestic capability development.
Short-term priorities include signing trade deals with mineral-rich countries and fast-tracking approvals via Government-to-Government agreements. A dedicated company has been established under the Ministry of Mines to acquire overseas assets. Strategic collaborations are underway with Argentina for lithium block development and with Australia’s Critical Mineral Office.
Medium-term priorities focus on scaling processing capabilities for battery-grade materials and recycling, establishing mineral parks, and fostering academia-industry-government partnerships for research and development.
The National Critical Mineral Mission, launched in January 2025, allocates INR 16,300 crore with an expected INR 18,000 crore in public sector investment for FY25-FY31. The Battery Waste Management Rules 2022 and a planned INR 1,500 crore incentive scheme aim to boost domestic recycling capabilities.
Production Linked Incentive schemes are catalyzing investments in advanced chemistry cells and battery components. The report projects that by 2040, advanced recycling could recover up to 95 per cent of key materials and cut manufacturing emissions by 30-40 per cent.
Outlook
The report emphasizes that EVs represent the most practical and scalable pathway for India’s clean mobility transition, outperforming hybrids and hydrogen fuel cell vehicles on cost, infrastructure readiness, and emissions reduction.
The shift to EVs is expected to drive a 20-30 per cent increase in renewable electricity generation by 2035. Long-term success will depend on advancements in battery chemistries and motor technologies, supported by skill development programs and integrated supply chains spanning mining, refining, manufacturing, and recycling.