Trump Tariffs and Indian Auto: Will They Accelerate EV Growth or Undermine 'Make-In-India'?

The latest wave of US trade tariffs under President Donald Trump’s administration is triggering ripples across global industries — and India’s electric vehicle (EV) ecosystem stands at a curious crossroads. While the tariffs are aimed at curbing Chinese dominance in key sectors, their indirect consequences may prove to be both a catalyst for short-term EV growth and a stumbling block for long-term domestic manufacturing ambitions.

Tariff Fallout: An Unexpected Boon for Indian EV Makers?

The US administration’s aggressive trade stance — including a 46% tariff on Vietnam-made goods and restrictions targeting Chinese goods — has created a global supply chain churn. For India, this disruption opens the door to cheaper lithium-ion battery imports, as global manufacturers seek new markets for their now-displaced inventory.

This scenario could lower EV production costs in India, prompting automakers to offer electric two-wheelers and entry-level EVs at more competitive price points. According to industry insiders, this is an appealing prospect, particularly in the price-sensitive rural and Tier-II markets where EV adoption has been sluggish.

“EVs will definitely become cheaper,” says one analyst, citing how US pressure on India to reduce tariffs for companies like Tesla might also benefit other global EV brands. These dynamics may lead to a short-term boom in EV adoption, driven by more affordable vehicles and components.

The Risks: Undermining India’s Battery Supply Chain

Despite these gains, experts caution that the surge in cheap imports could derail India’s localisation efforts in battery manufacturing — a key pillar of the ‘Make-In-India’ initiative.

India currently imports 100% of its lithium-ion cells, though efforts are underway to change this. Projects like Reliance’s 100GWh gigafactory, Exide’s 6GWh facility, and Ola’s cylindrical cell production line mark serious intent. However, domestic battery infrastructure remains in its infancy, and experts fear that increased dependence on foreign supply will stall local investment.

“If the Chinese supplier enters, in six years you can’t change it,” warns Vikram Handa, MD of Epsilon Carbon Pvt Ltd, pointing out the long-term risk of a locked-in supply chain. This dependency could cripple Indian competitiveness in future if Chinese suppliers choose to hike prices or divert supply elsewhere.

Even with India’s Production Linked Incentive (PLI) schemes and lowered duties on critical minerals, the lack of investment in local anode/cathode production continues to be a bottleneck.

Navigating the Middle Path: A Tightrope Act for Policymakers

Industry leaders and policy experts agree that the Indian government must strike a fine balance: enabling affordable EV growth today while safeguarding domestic innovation and resource independence tomorrow.

Vijay Chauhan, Executive Director at Deloitte India and former IRS official, notes that anti-dumping safeguards are already in place. If foreign imports begin harming domestic manufacturers, the Director General of Trade Remedies can impose corrective duties to level the playing field.

However, long-term strategy needs to go further. Chauhan stresses the urgency of supporting multi-ion battery technologies (e.g., sodium-ion, calcium-ion), which use more abundant local minerals. “India doesn’t have the luxury of time,” he says. “We must boost lithium-ion imports to fuel EV growth now, while also pushing innovation in multi-ion chemistries.”

Conclusion: An Inflection Point for Indian EV Industry

The Trump tariffs have, paradoxically, offered India a rare strategic opportunity. While the influx of cheap batteries may give a shot in the arm to EV sales, it also highlights the fragility of India’s battery ecosystem and the need for faster, deeper localisation.

If handled smartly, India can use this moment to accelerate EV adoption without losing sight of its long-term vision for manufacturing sovereignty and green innovation. But the window is narrow — and the time to act is now.