India and Germany join forces to restructure EV supply chain: India's strategic path to reduce dependence on China

India's Electric Vehicle Supply Chain Conundrum: 100% Import Dependence and Single-Source Risk

India is accelerating its electric vehicle (EV) transition, committing to 30% new EV sales by 2030 and net-zero emissions by 2070. However, this ambition faces a structural weakness: key battery minerals—lithium, cobalt, nickel—are 100% imported, whether in ore or processed form. More critically, the global midstream processing is highly concentrated in China, creating a "single point of failure" in the geo-economic landscape. Any supply chain disruption will directly pressure India's domestic manufacturing.

India is not unaware of the risk. Its domestic policies have long focused on demand-side subsidies (e.g., the FAME scheme) and downstream assembly incentives (e.g., the ACC Battery PLI scheme), but upstream mineral procurement and midstream processing remain unbroken. Local suppliers lack the technical capability, making localization requirements unenforceable. India's EV market structure also differs from the West—two-wheelers, three-wheelers, and public transport dominate, not passenger cars. This requires a supply chain strategy that prioritizes mineral efficiency, i.e., minimizing mineral consumption per passenger-kilometer.

Why Germany Is the Best Partner: Technological Complementarity and Strategic Parity

Seeking external partners is India's inevitable choice. Companies from South Korea and the U.S. tend to protect core IP and often demand vertically integrated plants; while China leads in every supply chain segment, it has already leveraged critical minerals and technology exports as strategic leverage, making equal cooperation difficult. In contrast, Germany shows unique complementarity.

Germany has a world-class automotive industrial base and plans to become the third-largest battery manufacturing country by 2030. Yet Germany lacks domestic battery mineral resources and faces high energy and labor costs. India can provide solutions in these areas: low operational costs, a large pool of engineers, domestic market scale, and a springboard for German EV exports to the Asia-Pacific region. This "technology for market plus cost optimization" model makes the two countries a natural fit.

Three Cooperation Areas: From Financing to Standards Alignment

CSEP's research identifies three levels for India-Germany cooperation:

• Financing and Asset Acquisition: Leverage the existing India-Germany Green and Sustainable Development Partnership (GSDP) and KfW's raw materials fund to co-invest in mining, processing, and recycling facilities in India or third countries. This reduces mineral supply risks and ensures stable raw material access for manufacturers in both countries.

• Innovation and Standards Co-creation: India lacks domestic battery testing laboratories. It can partner with German institutions to set up testing infrastructure suited to India's climate conditions, while aligning its standards with EU export requirements. German expertise in metallurgy and refining can be introduced via joint ventures.

• Infrastructure Interoperability: India should promote charging protocols (e.g., CCS2) in line with global standards and align its "Battery Aadhaar" system with the EU Battery Passport. This opens up larger markets for second-hand battery financing and recycling.

A Microcosm of Asian Supply Chain Restructuring: From "China +1" to "India-Germany Axis"

The deeper significance of India-Germany cooperation lies in its representation of the global and Asian supply chain trend moving from over-concentration to diversification.## The Microcosm of Asia's Supply Chain Restructuring: From "China+1" to the "Germany-India Axis"

The deeper significance of the India-Germany partnership lies in its representation of the trend for Asia's, and even the global, supply chain to shift from excessive concentration to diversification. Over the past decade, the "China+1" strategy has driven the dispersal of manufacturing to Southeast Asia, but the transfer of critical mineral processing links has remained slow. The collaboration between India and Germany directly challenges China's dominance in the mid-stream processing sector.

For India, this is not just a tactical choice to reduce dependence on China, but a strategic opportunity to build comprehensive industrial capabilities. By absorbing German technology, India has the potential to upgrade from simple component assembly to a resilient participant in the global electric vehicle value chain. For Germany, the Indian market is not only a sales destination but also a key fulcrum for shedding cost pressures within the EU and maintaining global competitiveness.

Long-Term Impact: Reshaping the Regional Economic Landscape

If the India-Germany cooperation proceeds smoothly, Asia's EV supply chain will present a new triangular structure: China's share in mid-stream processing may gradually decline, the India-Germany axis will emerge as an independent node, and resource-rich countries like Indonesia and the Philippines will become mineral supply bases. This shift will influence the direction of regional trade agreements—the India-EU free trade negotiations may accelerate due to supply chain synergies.

Of course, challenges remain. India's domestic policies need to pivot from the absence of mid-stream links to technology introduction and infrastructure investment; German companies must also overcome uncertainties about India's business environment. But as the CSEP report states: "India cannot go it alone." In a time of deep regional economic interdependence and rising geopolitical risks, the India-Germany partnership may become a model for Asia's supply chain restructuring.