Sustainable Manufacturing Practices

How India’s EV Industry is Redefining Green Production

As the world focuses on decarbonization, India is not only part of the electric vehicle (EV) revolution, but it is creating a new model for green industrialization, with sustainable manufacturing as a cornerstone of this rapidly expanding EV industry. But this transformational ambition is driven home by India, which has already registered 4.4million vehicles by August 2024 equivalent to a remarkable 6.6% market share.

This expansion is fostered by a strong package of strategic government programmes. Initiatives such as the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India (FAME) scheme and the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cells (ACC) have pumped billions of rupees into the market.

Altogether, these come with ₹500 crore Electric Mobility Promotion Scheme (EMPS) for twoand three-wheelers (announced March ’24). This foundation is further clarified by the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) (June 2, 2025 revision) which prescribes that advantageous investment and exemption from customs duty should be made available, provided the local/ green manufacturing road map is followed.

These future ready initiatives will ensure that the EV revolution in India is unique in terms of an end-to-end focus on ecological responsibility, and not just limited to the operation phase, making it inherently green from the development stage to adoption.

Why Sustainable Manufacturing Matters in the EV Industry
Electric vehicles lessen emissions on the road, but their environmental impact starts at the factory floor. India recognizes this and is prioritizing the manufacture of cleantech products such as batteries, motors and controllers, with its recent Union Budget, and National Manufacturing Mission. These measures integrate sustainability into production via requirements for low-carbon, circularity, and domestic value added.

Manufacturers are entitled to incentives only upon fulfillment of clearly defined criteria under the revised SPMEPCI policy for local sourcing and green processes. India’s plan also involves environmentally sustainable recycling of Li-ion battery scrap, decreasing the amount of hazardous waste, and less reliance on imported raw materials. Focus on ESG compliance, lifecycle emissions reduced and ethical sourcing means that EV sector’s green credentials do not end with the car’s operational use.

While the world’s supply chains are in need of greater transparency and accountability, India’s embrace of sustainable manufacturing can become a winning proposition not only by being competitive, but cleaner in its drive towards mobility.

Key Sustainable Practices Emerging in India’s EV Ecosystem
Indian EV manufacturers are embracing greener methods at every stage of production. One of the big changes will be switching to clean energy. The National Manufacturing Mission (NMM), as defined under the provisions of the 2025 Union Budget, is incentivizing the use of renewable energy in factories where solar panels, electric vehicle batteries and energy storage systems are made.

Moreover, a lot of the new manufacturing plants are being constructed as green buildings that follow guidelines laid down by the Indian Green Building Council. These certified buildings have helped to cut energy use by 15,000 megawatt hours and water use by 45,000 kiloliters for every million square feet built.

Conservation of water is also a growing concern. To reduce freshwater consumption, factories are installing such systems as rainwater harvesting, wastewater recycling, and zero-liquid discharge. On the materials front, the government has reduced import duties on battery scrap and some critical minerals, which will make it easier for companies to recycle and reuse key components. Smart manufacturing is taking off as well, with increasingly sophisticated systems like artificial intelligence that can keep an eye on energy use and issue early warnings of failures to improve efficiency.

Policy is also driving local sourcing by urging small and medium suppliers and encouraging other Indian companies which will reduce emissions by lowering transportation emissions. Collectively, these initiatives are developing India electric vehicle space into a sustainable manufacturing model.

Role of Technology in Enabling Green Manufacturing
Advanced technologies are playing a significant role in developing a more sustainable and efficient manufacturing ecosystem for electric vehicles in India. March 2024 was the launch date of “Sangam: Digital Twin” by the DoT to leverage 5G, AI, IoT & digital twin that would simulate industrial operations in a live environment.

It enables manufacturers to make the most out of their resources, to predict maintenance requirements, and to minimize waste. To monitor environmental performance, the 2024 Union Budget applied carbon intensity targets to heavy industry, and a compliancebased carbon market is to be implemented in 2026.

Automated solutions are being created to check emissions with the manufacturer. Additionally, blockchain tech is being used to ensure ethical material sourcing. Incubation centres such as the Software Technology Parks of India (STPI) Blockchain Centre in Gurugram are conducting pilots for traceability platforms on supply chains. In combination, these digital tools help Indian companies become compliant with global standards for environmental cleanliness and to develop cleaner, smarter factories.

Policy Push & Ecosystem Support
India’s electric vehicle (EV) revolution is being powered by a robust policy framework and a rapidly expanding ecosystem. The two principal efforts are the Production Linked Incentive (PLI) Scheme for auto sector, which has a financial outlay of ₹25,938 crore, and the Advanced Chemistry Cell (ACC) PLI Scheme with an outlay of ₹18,100 crore. The programs are designed to help bring more domestic production of key EV components and batteries. It’s a minimum 50% local value addition, thereby instilling the development of strong local supply chains under all these schemes.

States- such as- Uttar Pradesh, Tamil Nadu, Jharkhand, Haryana – too are playing a key role by rolling-out their EV policies by providing incentives such as- land allotment, tax exemptions, and subsidies to facilitate green-field EV manufacturing units and exclusive industrial parks. On the policy front, cooperation between startups, OEMs and government bodies is helping improve the EV ecosystem. Specific initiatives such as the ₹10,900 crore PM e-DRIVE program, and the smart manufacturing hubs as part of SAMARTH (Smart Advanced Manufacturing and Rapid Transformation Hub) Udyog Bharat 4.0, are driving innovation as well as cross-sectoral collaboration.

Summits such as Vibrant Gujarat 2024 have seen multiple investors from countries across the world come forward to collaborate in India’s green mobility trajectory – a testament to the growing faith in the long-term promise of the sector. Investors’ interest is ticking upwards, not just encouraged by financial rewards but as much in tune with India’s EV goals, which align with global sustainability plays.

Capital is sprinting to produce electric vehicles, battery plants, and green supply chains. The incorporation of environmental, social, and governance (ESG) considerations in industrial policy also adds to India’s attractiveness as a competitive and future ready hub for investments in clean mobility. Public-private partnerships are starting to become a powerful influence, with sustainable manufacturing becoming less a requirement due to regulations and more strategic advantages.

Challenges on the Path to Green Manufacturing
Despite significant momentum, there are several hurdles in India’s green manufacturing sector:

High-Cost Barriers:
Green type technologies tend to require high capital and operational investments. Unless there is the right kind of incentives in place, such costs could be barriers to mass market adoption, especially from smaller manufacturers.

Lack of Standardized ESG Benchmarks
India is leading ESG frameworks, but reporting formats vary across sectors. ESG adoption is further challenged because the regulations are highly fragmented, and enforcement is limited. It is this inconsistency that makes benchmarking such a challenge, particularly for investors looking at sustainability performance.

Skilled Labor Shortage
Specialization is ever more important in manufacturing, and in the cleantech sector. But there are shortages in vocational training that imperil expansion. A recent study has cautioned that India will need to ramp up skill development or miss job creation and industrial expansion targets.

Ecosystem Gaps
Smaller manufacturers particularly MSMEs however, still face challenges in implementation of C&C owing to lack of dedicated infrastructure and technical support, even as the likes of 2025 Manufacturing Mission and National Green Hydrogen.

The Road Ahead
There is no denying that India is at the doorsteps of a new era called Industry5.0 – indeed a new phase of a different kind – human centric, sustainable factories. This vision outlined in a recent policy paper is centered on the fusion of human creativity with AI-powered automation, collaborative robots, and digital twins, to create robust and efficient manufacturing systems. Meanwhile, India aims to take charge of the global EV value chain, with focus on sustainability as its unique appeal.

In fact, a NITI Aayog study has put the export potential for auto components into overdrive estimating the figure could reach a whopping $60 billion by 2030, pushing up India’s global parts market share from 3% to 8%. This transformation hinges on riding clean energy. India has already surpassed 209GW of renewable energy capacity on its path to the 500GW while also rooting green standards in the EV ecosystem.

Meeting these demands requires the industry to act together in a cohesively catalyzed digitization and sharing platforms. An upgraded PLI, FAME, and Green Hydrogen mission provide structural scaffolding, but the successful scaling of humanmachine integration, ethical AI, and circular supply chain demand more unified public–private action. Skills, infrastructure build-out and common ESG benchmarks are vital enablers.

With the Indian government outlining its Industry5.0 blueprints and clean-tech incentives, how well it’s able to align policy, innovation, and sustainability will go a long way in deciding if it lands the leadership mantle in the global, green EV economy. Aligned in the right direction, the digital factory can work as a launch pad for India’s sustainable industrial future.

Merging Sustainability, Technology & Mobility
The transformation of India’s electric vehicle manufacturing represents the confluence of sustainability, technology, and mobility. Infrastructure, policy and digital innovation are converging to foster green production spanning government-led drives like FAME and PLI schemes to the National Mission on Transformative Mobility and Battery Storage.

As India moves closer to Industry5.0, enabling human-centric, eco-efficient factories is becoming a reality through AI-driven automation, digital twins and integration of renewables. By integrating ESG frameworks into manufacturing, India is poised to lead global EV value chain.

This is where India can differentiate itself with low carbon manufacturing and resource circularity. An ACC official recently told Down To Earth that the new policy is expected to boost benefits in domestic auto component exports from US$20billion to US$60billion by 2030, signifying its vision. The shift is neither just industrial evolution nor an economic reality; it is an environmental imperative slashing lifecycle emission, promoting renewable manufacturing and the bedrock of India’s net-zero goals.

India’s next steps will need collaboration across industries: standardizing ESG benchmarks, adoption of digital technology, upskilling through initiatives such as Skill India. The coordinated policies, investments and innovations will help India turn smart factories into global models of sustainable industrialization.” By aligning these two trends, the nation can realize industrial expansion and mobile decarbonization, making sure the EV revolution is both a business revolution and an environmental imperative.

Conclusion: Driving Toward a Sustainable Industrial Future
India’s electric vehicle manufacturing sector is not merely a harbinger of clean mobility but also a model of sustainable industrialization. With creative use of policy incentives, digital innovation and environmental responsibility, the country is in the process of redefining what green manufacturing can, in fact, look like on a scale.

That ranges from harnessing the power of Industry 5.0 technologies such as AI, IoT and digital twinning to infusing ESG principles throughout the value chain, India is charting a robust and decarbonized industrial ecosystem. This transformation is rooted in the synchronization of governmentbased schemes (FAME, PLI, SPMEPCI and Manufacturing Mission) with circular and renewable mechanisms.

But to fully make this vision a reality will require collective public-private action. ESG standards, Ecosystem-wide digital transformation, Infrastructure overhaul, and Workforce upskilling should continue to be front and center. If these pillars stand, India can not only pull ahead in electricvehicle manufacturing worldwide but also serve as a bastion of sustainable industrial expansion where technology, mobility and environmental guardian-ship inch forward in concert.■

Disclaimer: The views expressed by the author are his own and do not necessarily reflect the views of FMM magazine.