On 29 April, the Centre issued guidelines requiring electric truck makers to localize components such as battery management systems and vehicle control units to qualify for incentives under the PM E-Drive scheme. E-truck makers must use domestically produced components from September 2026.
The government had eased rules during the 2025 rare-earth magnet shortage by extending deadlines for importing related subassemblies without forfeiting incentives. Mint explains the rationale behind the policy directive.
Why are e-trucks important?
Trucks account for a small (3%) share of India's total vehicles but contribute about a third of the country's road sector greenhouse gas emissions, making the shift towards electric trucking important.
The challenge, however, is the green premium, or greenium, that consumers have to pay for electric vehicles. While the price gap between petrol and electric two-wheelers has almost reached parity in India, according to a December 2025 report by consultancy firm KPMG, the gap in segments such as buses and trucks remains significant.
The price of an electric truck may be 2-2.5 times that of its diesel counterpart, according to an August 2025 report by the government's think tank NITI Aayog.
These factors prompted the Centre to start incentivizing e-trucks under the ₹10,900-crore PM E-Drive scheme with a ₹500 crore allocation for about 5,600 trucks.
What are the localization rules?
The localization rules under the PM E-Drive scheme dictate which components can be imported and for how long. Under the Phased Manufacturing Programme (PMP), the ministry of heavy industries has listed components which can be imported until a certain date.
On 29 April, the ministry amended the PMP for e-trucks, its third such amendment for zero-emission trucks, mandating the use of locally produced vehicle control units, battery management systems, and DC-DC convertors starting September 2026.
The two earlier amendments were made to allow, and then extend, the imports of rare-earth magnet-laden motor assemblies.
Why did the Centre relax requirements before?
When China, which controls 90% of the world's rare-earth refining capacity, halted exports of these magnets, India's EV makers were left scurrying for supplies. The government found that smaller vehicle segments, such as two- and three-wheelers, could operate without these magnets embedded in their assemblies. The challenge was with larger vehicle segments, such as electric trucks and buses, which were just starting to be adopted in the country.
So, the ministry of heavy industries allowed e-truck makers to import subassemblies of motors containing these magnets, without losing out on incentives.
Earlier, these manufacturers had to localize their supply chains by September 2025, a target which was later shifted to March 2026. In March 2026, it was once again deferred to September 2026. E-bus and e-truck makers such as Tata Motors, Ashok Leyland, Montra Electric, and EKA Mobility were in talks to seek further relaxations in the localization rules under the PM E-Drive scheme, Mint reported in December 2025.
However, Zoeb Karampurwala, chief product officer of EKA Mobility, told Mint that the amendment was made after discussions with the industry, at a time when most e-truck manufacturers have already been preparing for increased localization requirements.
While this amendment is in the same direction as localization rules for electric buses, therefore providing a strong foundation for e-trucks, some distinct challenges still persist, he said.
“Unlike e-buses, e-trucks often require gearboxes, which now also need to be localized alongside motors and controllers. While India has made meaningful progress in developing a domestic ecosystem, certain challenges persist. For instance, motors and motor controllers continue to be affected by reliance on imported rare-earth magnets,” he added.
The rest of the companies mentioned above did not respond immediately to Mint's 4 May emails.
What do experts say?
This is a timely move, according to some experts, to make India not just an assembly hub but an economy that makes its vehicles from the ground up.
"In my view, this amendment sends a clear signal that India is moving beyond assembly towards deeper localization," said Amit Bhatt, India managing director, International Council for Clean Transportation (ICCT), a global think tank.
“From September 2026 onwards, requiring component-level manufacturing of BMS, DC–DC converters, and VCUs, including PCB-level electronics and semiconductor assembly, is a significant shift. The transition window allowing BMS imports until August 2026 is also pragmatic, giving industry time to build capabilities,” he said.
For India's automotive spare parts makers, the country's domestic EV sales growth at a 30% annualized rate (CAGR) is an important opportunity, according to a September 2025 McKinsey & Co. report.
EV sales in India reached 2.45 million units in 2025-26, up 25% from the year-ago period, according to data from the Federation of Automobile Dealers Association (FADA).