India’s transport sector faces a critical shift in 2025. The country spent over $130 billion on crude oil imports in the fiscal year 2024–25. Transport remains the largest consumer of imported oil. This dependency strains India’s economy, weakens the rupee, and inflates household expenses. However, a decisive move towards electric vehicles (EVs) powered by solar energy promises to cut oil imports drastically and boost domestic manufacturing. This change requires strong policy support and infrastructure development.
Economic Shift Favouring Electric Vehicles
EV costs have fallen . Battery prices dropped by 90 per cent since 2010 to $115 per kWh in 2024. Solar power costs have also plummeted by 90 per cent, making it the cheapest source of new electricity. EV drivetrains are three to four times more efficient than petrol or diesel engines. When combined with solar energy and storage, EVs reduce transport costs and shield the economy from oil price shocks. Battery durability has improved, with lithium iron phosphate (LFP) batteries now lasting over 5,000 charge cycles, tripling their useful life compared to a decade ago.
Reducing Import Dependency Through Clean Technology
Critics argue EVs merely shift dependency from oil to imported batteries and solar panels. However, oil is a consumable cost paid repeatedly at volatile prices. Clean technology hardware is a capital good, sourced from multiple countries, manufactured domestically, and recyclable. Even if all batteries and panels were imported, the import bill would drop by about 80 per cent compared to oil. India is investing in domestic battery and solar manufacturing through Production Linked Incentive (PLI) schemes and promoting recycling to recover over 95 per cent of critical battery metals.
Need for Policy and Strategic Intervention
Despite favourable economics, EV adoption remains low in India, with only 2 per cent of new car sales in 2024 being electric. Slow market response, lack of infrastructure, and risk aversion among manufacturers hinder growth. China’s EV surge was driven by strong government policies, manufacturing incentives, and infrastructure planning. India requires clear targets, standardised charging infrastructure, and localisation strategies to avoid prolonged oil dependence and boost domestic value capture.
Electrifying Freight Transport First
Heavy freight consumes the most diesel and offers the fastest route to savings. Electrifying trucks along key corridors like the Golden Quadrilateral will yield large benefits. Deploying Megawatt Charging System (MCS) hubs capable of over 1 MW charging will enable fast, efficient truck charging. Solar-plus-storage plants near highways can supply affordable, reliable power. This approach reduces logistics costs and supports inflation control.
Innovative Financing and Supply Chain Security
High upfront battery costs can be mitigated through leasing and battery-as-a-service models. Public procurement can focus on vehicle-kilometres rather than vehicle ownership, encouraging fleet electrification. Diversifying battery chemistry to include LFP and sodium-ion reduces reliance on scarce materials like nickel and cobalt. India must develop domestic production of battery components such as anodes and separators. Recycling under Extended Producer Responsibility will secure a sustainable supply of battery metals.
Integrated National Strategy and Infrastructure
India needs a unified plan linking targets, infrastructure, manufacturing, and standards. A 2047 goal of no-oil transport with interim zero-emission milestones will provide market clarity. Electrifying freight corridors with MCS hubs and facilitating long-term power purchase agreements for solar-plus-storage is essential. Battery warranties must reflect improved lifetimes to build consumer trust. Coordinated power market reforms and logistics planning will ensure charging is affordable, reliable, and widespread.
Questions for UPSC:
- Point out the economic and environmental benefits of transitioning from fossil fuels to electric vehicles in India.
- Critically analyse the role of policy interventions in accelerating renewable energy adoption in developing countries, with suitable examples.
- Estimate the impact of reducing oil import dependence on India’s current account and currency stability. How can domestic manufacturing strengthen this effect?
- Underline the challenges and opportunities in establishing a sustainable battery supply chain in India, considering global geopolitical factors.
