Requesting Korean Companies to Set up Plants in India
India, the world’s fourth-largest car market, is courting Korean battery companies to establish local battery plants.
The Indian government has consistently expressed its desire to attract investment from major Korean battery makers. It launched the Go Electric campaign in January 2021. The federal government exempts the cost of registering electric vehicles, and state governments also offer various tax benefits. Recently, the Indian government rejected Tesla’s request for a tariff cut. Analysts say that its intention is to induce carmakers to set up production plants in India.
India currently does not have an electric vehicle battery plant and relies entirely on imported batteries. Among Korean companies, Samsung SDI runs a local subsidiary that imports battery cells. But it focuses on battery packs for smartphones.
Hyundai Motor Group has established a strong presence in India. Hyundai Motor Co. built a factory in Chennai, India, in 1998. According to the Federation of Automobile Dealers Associations (FADA) of India, Hyundai Motor Co. ranked second in the Indian automobile industry in December 2021 with a 15.83 percent share. Kia came in fifth with a 4.98 percent share, beating Toyota, Renault, and Honda. Hyundai Motor Group announced in December 2021 that it plans to invest 40 billion rupees (about 620 billion won) to launch six electric vehicle models in India by 2028.
It remains to be seen whether Korean battery makers will immediately respond to the Indian government’s request to establish plants in India. They are busy making investments in North America, Europe, and China. However, they are expected to set up plants in India in the future in light of its huge growth potential.
India ranks fourth in terms of sales and fifth in terms of production in the world auto market, including two-wheeled vehicles. According to Motor Intelligence, an auto market analyst, the size of the Indian electric vehicle market is expected to expand from US$5.47 billion in 2020 to US$171 billion in 2026. Experts forecast that electric vehicles will account for 20 percent of all vehicles produced in India in 2030.