Japan-India EV Investment Round Table

With electric vehicle (EV) sales on the rise and climate action accelerating, decarbonisation of the transport sector is set to be a central issue on the 2023 global climate change agenda. 

The Government of India has already pledged 30% of all new vehicle sales in the country to be EVs by 2030. To reach this target, India will need an investment of USD 266 billion between 2020 and 2030. While transport electrification will bring many advantages, including reducing CO2 emissions and enhancing India’s energy security, a newly launched report estimates that significant foreign direct investment will be needed to increase EV component and battery manufacturing. 

This round table, organised by IGES, the International Institute for Sustainable Development (IISD), and Columbia University, highlighted areas of cooperation for Japan and India within the EV ecosystem. Held in a virtual format, the round table will cover recent EV developments in India and explore collaboration with Japanese automakers (OEMs), component manufacturers, and institutional investors.

Building on the independent report Investor Perspectives on Accelerating Growth in the Indian EV Ecosystem, this round table provided recommendations for how policy-makers in India can support EV investment.

Takeaways from the virtual roundtable

•    Speakers mentioned that the nature of any Japan-India partnership should be geared towards creating competitiveness in the domestic ecosystem in India and opening up the market for international investors through JVs and by directly facilitating investments. 
•    Platform-based approaches to engage with companies and institutions like the National Investment and Infrastructure Fund are also being considered within India.
•    Industry players in India mentioned that, unlike US, India needs to look at miniaturisation rather than gigafactories since the country is land constrained. The automotive sector has taken the lead, and Japanese cars have led the automotive success story in India. Therefore, Japanese companies should think of miniaturisation approaches in India.
•    India is becoming the factory of the world at the Tier 2, 3 levels, and it is now a net exporter of vehicles. Indian OEMs are now looking to export to international markets. 
•    Japanese battery cells have helped Indian OEMs become competitive and create a key differentiator. There is huge scope for joint ventures in this area. 
•    A million EVs will be needed to be produced every year to meet India’s 2030 EV targets, and the downstream value chain has lots of opportunities. These are areas where technology transfer needs to happen. Semiconductors is an area that can become important from a global supply chain rationalisation standpoint.
•    For sourcing, in terms of partnerships and models, it was noted that Japan’s JOGMEC works with private companies to gain access to lithium. India’s approach is quite different with KABIL. India could partner with Japanese automakers for sourcing, and in turn, they can manufacture vehicles in India.
•    Commercial vehicle finance is a huge roadblock to EV adoption in India – commercial vehicle electrification is a new segment, and collaboration on financing with Japanese financial institutions can be beneficial. 
•    There are opportunities for alternative vehicle expansion in India along with EVs, government but officials mentioned that it will come down to investment size. 
•    The PLI-ACC condition the condition for minimum 50% domestic value addition and cumulative investment, seems to be in favour of new entrants as compared to existing and well-established (including European) players in India who already set up their facilities with the respective investments.