This will have far-reaching implications on the global auto industry. As the inevitable global movement toward EVs accelerates, countries like have to up their game to be leaders in this new automotive revolution.

India’s Faster Adoption and Manufacturing of hybrid and Electric vehicles (FAME) scheme has been central to its push for EV adoption.

However, while FAME has made strides in promoting electric mobility, India’s strategy faces significant challenges, particularly in its dependence on foreign imports for critical EV components, especially from China.

In contrast, China has taken a more nuanced approach, with its “Plus One” strategy — tapping into global supply chains, while simultaneously diversifying sources to mitigate risks. As India navigates its own EV future, it would be wise to consider the lessons from China’s more globalised approach.

India’s FAME Subsidy: Lacking Long-Term Strategy

India’s FAME scheme has been a key tool in boosting EV adoption. Since its inception, the programme has focused on providing subsidies for EVs, charging infrastructure and manufacturing incentives.

This has led to an increase in the number of electric two-wheelers, buses and cars on the road, as well as the development of charging infrastructure in major cities. The policy has undoubtedly made EVs more affordable for Indian consumers, helping address the challenges of higher upfront costs compared to conventional vehicles.

Some impact numbers are given in Figure 1 and 2 below:

Launched in April 2019, FAME II started with a Rs 10,000 crore allocation, later boosted to Rs 11,500 crore. The scheme aimed to build a strong EV ecosystem by offering incentives for two-wheelers, three-wheelers, cars and buses.

By March 2024, 69 per cent of the funds had been utilised, showcasing progress while highlighting ongoing challenges.

However, the FAME scheme has largely relied on imported components, especially from China, for batteries and critical vehicle parts. This has led to an ongoing dependence on foreign suppliers for core EV technologies.

While China’s dominance in the global EV supply chain has enabled India to meet short-term goals, the long-term sustainability of this approach is questionable. The ongoing geopolitical tensions between India and China further exacerbate the risks associated with such heavy reliance on Chinese imports, leaving India vulnerable to supply chain disruptions and price fluctuations.

China’s 'Plus One' Strategy: Global Integration + Diversification

China, the largest EV market globally, has adopted a strategic "Plus One" (C+1) approach in the global supply chain. This enables it to maintain its dominance in the EV sector while minimising reliance on a single market, particularly for critical materials and technology.

By diversifying its sources of lithium, cobalt and other rare earth metals through strategic investments in countries like Australia, Argentina and the Democratic Republic of Congo (DRC), China mitigates supply chain risks and secures a strong position in the global market.

Moreover, it has strengthened its influence through collaborations with international EV companies and governments. Chinese firms like BYD, CATL and Geely have made significant inroads globally, via joint ventures and investments, gaining access to essential technologies, and embedding its EV supply chain in the worldwide ecosystem.

This strategy allows China to lead and adapt in the EV market, enhancing its competitive advantage while avoiding over-dependence on any one market.

Once seen as cheap alternatives, Chinese cars — especially EVs — are now recognised for their competitive pricing and performance, despite efforts like the US Inflation Reduction Act (IRA) to limit Chinese competition. Industry experts warn that this growth could pose a challenge to brands like Hyundai and Kia in global markets, as China shifts from low-cost exports to higher-priced vehicles.

Figure 3 shows BYD alone makes up 56 per cent of China’s car exports, while Figure 4 reveals an 81 per cent rise in the average price of Chinese cars, signaling a shift from low-cost exports. Chinese companies are aggressively entering global markets, especially Europe, capitalising on their competitive edge.

Self Reliance Vs Global Integration

India’s FAME subsidy has driven EV adoption, but fails to address deeper issues of self-reliance and long-term sustainability. While it reduces EV costs, it doesn’t build a strong domestic supply chain. India remains heavily dependent on Chinese imports, particularly lithium-ion batteries, which limits scalability and exposes the sector to supply chain risks.

For example, Contemporary Amperex Technology Company (CATL) produces 40 per cent of global EV batteries, sets the standard with high-capacity, fast-charging batteries, supported by significant government subsidies — essential to driving global dominance. Figure 5 below gives you some subsidy numbers:

These kind of subsides with a year-on-year average increase of 63 per cent (as one given to CATL) becomes essential to drive EV uptake and establish dominance in the global supply chain. 

Compared to FAME, China’s "Plus One" strategy is a more pragmatic approach, diversifying resources and partnerships to build a resilient global EV supply chain.

For India to compete, it must shift focus from short-term subsidies to developing a robust domestic supply chain. India offers the highest subsidies (40-50 per cent), while other countries like China, South Korea and the US offer much lower ones, making India’s approach unsustainable without a bigger focus on the supply chain.

In 2022, India received 10 bids for the PLI Scheme for Advanced Chemistry Cell (ACC) Battery Storage, totaling 130 GWh. But only four companies succeeded. Despite an initial outlay of Rs 18,100 crores and an increase by 6X in 2023, India’s efforts are still insufficient to build a self-sustaining supply chain, as seen in Figure 5.

India’s 2023 PLI scheme outlay is just 16 per cent of China’s CATL investment, highlighting a major gap. To close it, India must prioritise domestic battery manufacturing, critical components and local supply chains. This will require strong collaboration between government and private sectors, with a focus on infrastructure, R&D and policies that foster innovation and self-reliance.

The Path Forward: A Hybrid EV Strategy

India must balance self-reliance with global integration. By adopting a hybrid approach, similar to China’s “Plus One” strategy, India can position itself as a key player in the global EV supply chain while strengthening domestic manufacturing.

Strategic partnerships with global EV leaders, along with targeted subsidies for local supply chains, will reduce dependency on foreign imports and foster long-term competitiveness.

(The writer is a public policy and urban transportation enthusiast and specialist. Views are personal)