Rare Earth, Real Drive: India Eases EV Rules to Accelerate Electric Trucks and Buses

Image Source: EMobility+

India’s electric mobility ambitions are shifting gears. In a strategic move to boost the rollout of electric buses and trucks under the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme, the Ministry of Heavy Industries (MHI) is considering a relaxation of localization norms—specifically for the import of rare earth materials and components. This potential policy tweak aims to address supply chain bottlenecks while keeping the momentum of domestic EV manufacturing alive.

The PM E-DRIVE scheme, launched in September 2024 with an outlay of Rs 10,900 crore, is designed to support electric two-wheelers, three-wheelers, trucks, buses, ambulances, and public charging infrastructure. While the scheme emphasizes Make in India through strict localization mandates, the government now appears open to calibrated flexibility for critical imports.

Key highlights from the evolving policy

1. Rare earth imports under review
- The government is evaluating exemptions for rare earth elements and components used in traction motors, battery management systems, and power electronics
- These materials are essential for high-performance EVs but are difficult to source or manufacture domestically at scale
- The relaxation would apply specifically to electric trucks and buses, which require more robust systems than smaller EVs

2. Localization norms under PM E-DRIVE
- The scheme mandates phased domestic manufacturing of key EV components such as battery packs, DC-DC converters, vehicle control units, and onboard chargers
- For electric buses, HVAC systems, brake compressors, and CCS2 charging inlets must be locally produced within six months of notification
- Battery management systems and DC-DC converters have a 12-month transition window before full localization becomes mandatory

3. Strategic rationale for flexibility
- Electric trucks and buses operate under heavier loads and longer duty cycles, demanding advanced components often reliant on rare earths
- India currently lacks sufficient refining and processing capacity for rare earths, making imports a short-term necessity
- The relaxation would ensure timely deployment of commercial EV fleets without compromising safety or performance

4. Impact on domestic manufacturing
- While the move may appear to dilute localization goals, it is expected to be temporary and targeted
- The government continues to push for indigenous capabilities, with plans to announce separate Phased Manufacturing Program (PMP) guidelines for emerging EV categories like ambulances and trucks
- The definition of manufacturing will follow the CGST Act, 2017, ensuring compliance and transparency

5. Industry response and future outlook
- EV manufacturers have welcomed the proposed relaxation, citing global supply chain constraints and the need for competitive parity
- Companies like VE Commercial Vehicles (a Volvo-Eicher JV) are already partnering with charging infrastructure providers like Jio-bp to expand operational readiness
- The government is expected to monitor imports closely and phase out exemptions as domestic capabilities mature

Why this matters now

India’s push for electrification in public and commercial transport is central to its climate goals and urban mobility reform. However, the success of this transition hinges on balancing self-reliance with pragmatic sourcing. By allowing limited imports of rare earths, the government is signaling a nuanced approach—one that prioritizes rollout speed without abandoning long-term manufacturing ambitions.

Looking ahead

The next few months will be critical as the MHI finalizes guidelines and monitors industry compliance. If executed well, this policy recalibration could accelerate India’s EV adoption curve, especially in high-impact segments like freight and mass transit. The challenge will be to ensure that temporary flexibility does not become a permanent dependency.

Sources: Energetica India Magazine, Motoring Trends, Press Information Bureau India