Hyundai Motor India Calls for Domestic Capabilities in Semiconductors, EV Battery Cells and Power Electronics

Hyundai Motor India has called for a major expansion of domestic capabilities in semiconductors, EV battery cells, rare-earth magnets and power electronics, arguing that India's automotive industry must move beyond manufacturing scale and develop ownership of the advanced technologies that will determine the future of mobility.

Hyundai Motor India Managing Director and Chief Executive Officer Tarun Garg, addressing the 66th Annual Session of the Automotive Component Manufacturers Association of India, said the country's next phase of automotive growth should focus on designing, developing and manufacturing critical technologies domestically.

India has already created one of the world's largest automotive manufacturing ecosystems.

However, the industry continues to depend on imports for several high-value technologies increasingly important to electric, connected and software-driven vehicles.

That dependence is visible in India's auto-component trade numbers.

The country exported approximately $24 billion of automotive components during FY26, while imports reached around $25.4 billion, resulting in a trade deficit of approximately:

$1.4 billion.

For Hyundai, the challenge goes deeper than the size of the deficit.

India's exports remain concentrated substantially in established automotive technologies, while imports contain many of the advanced technologies expected to become increasingly valuable as the global industry electrifies.

Hyundai Says India Must Move Beyond Manufacturing Scale

India's automotive manufacturing capabilities have expanded significantly over several decades.

The country has developed large production bases for:

passenger vehicles,

two-wheelers,

commercial vehicles,

tractors,

engines,

transmissions,

castings,

forgings,

and conventional automotive components.

This manufacturing ecosystem has helped India become an important global automotive production and export centre.

But Hyundai believes scale alone will not be sufficient for the next phase.

Future competitiveness will increasingly depend on who owns the technologies inside the vehicle.

These include:

semiconductor chips,

battery cells,

power electronics,

rare-earth magnets,

electric drivetrains,

and increasingly software and artificial intelligence.

Building domestic capabilities in these areas could determine how much economic value India captures from the transition toward future mobility.

India Records $1.4 Billion Auto-Component Trade Deficit

Garg highlighted the industry's trade balance to illustrate the challenge.

India's auto-component industry exported approximately:

$24 billion

during FY2025-26.

Imports stood at approximately:

$25.4 billion.

The resulting trade deficit was around:

$1.4 billion.

The deficit itself is relatively modest compared with the overall scale of India's automotive industry.

The composition of trade, however, is more strategically important.

India exports large quantities of established automotive components while continuing to import several sophisticated technologies and electronic systems.

As vehicles become more technologically complex, the value represented by these advanced components could continue increasing.

Advanced Technology Imports Are the Bigger Concern

Modern vehicles contain substantially more electronics than vehicles manufactured even a decade ago.

Electric vehicles intensify this transition.

An EV depends on technologies including:

battery cells,

battery-management systems,

inverters,

power-control units,

electric motors,

high-voltage electronics,

semiconductors,

thermal-management systems,

and sophisticated software.

If these technologies are predominantly imported, India could manufacture large numbers of vehicles domestically while a significant portion of their technological value continues to originate overseas.

Hyundai's argument is therefore centred on value creation rather than assembly volumes alone.

Semiconductor Capability Becomes Strategic Priority

Semiconductors are increasingly fundamental to automobile production.

Modern vehicles can contain hundreds or even thousands of semiconductor devices depending on their complexity.

Chips control systems including:

engine management,

battery management,

infotainment,

advanced driver assistance,

lighting,

connectivity,

safety systems,

power electronics,

and vehicle control.

The global semiconductor shortage following the pandemic demonstrated how vulnerable automotive production can become when chip supplies are disrupted.

Factories around the world were forced to reduce production because relatively inexpensive semiconductor components were unavailable.

For India, building domestic semiconductor capabilities could therefore strengthen both industrial competitiveness and supply-chain resilience.

Automotive Chips Require Specialised Capabilities

Automotive semiconductor manufacturing presents a particular challenge.

Vehicle chips need to operate reliably across:

temperature extremes,

vibration,

electrical fluctuations,

long product lifecycles,

and demanding safety requirements.

Automakers therefore require rigorous qualification processes before using new semiconductor suppliers.

India's semiconductor ambitions will need to encompass not simply fabrication capacity but an entire ecosystem including:

chip design,

packaging,

testing,

automotive qualification,

materials,

equipment,

and intellectual property.

Building these capabilities could reduce dependence on a concentrated global semiconductor supply chain.

EV Battery Cells Are Another Major Import Dependency

Battery cells represent one of the highest-value components in an electric vehicle.

India has developed growing capability in battery-pack assembly.

However, much of the underlying cell supply continues to depend on imports.

This creates a significant localisation challenge.

As EV sales rise, demand for lithium-ion cells could increase dramatically across:

passenger vehicles,

two-wheelers,

three-wheelers,

commercial vehicles,

and stationary energy storage.

Domestic cell manufacturing could therefore have implications extending well beyond the automotive industry.

Hyundai Is Already Localising EV Battery Operations

Hyundai Motor India has been developing its own localisation strategy for electric vehicles.

The company has established a battery sub-assembly facility for EV powertrains in Tamil Nadu and is working to localise additional components.

Its strategy includes domestic sourcing and development of:

battery packs,

power electronics,

drivetrain components,

and eventually battery cells.

Hyundai has also collaborated with Exide Energy Solutions to support localisation of battery-cell production and supply in India.

The objective is to improve cost competitiveness while building a more resilient domestic EV supply chain.

Localisation Could Help Reduce EV Prices

Battery costs represent a substantial portion of an electric vehicle's overall manufacturing cost.

Imported cells expose manufacturers to:

currency fluctuations,

international freight,

trade disruptions,

foreign supplier pricing,

and geopolitical risks.

Greater domestic production could reduce some of these vulnerabilities.

Scale could also improve economics over time.

If Indian cell manufacturers develop sufficient production volumes, localisation could help automakers reduce EV costs and improve the affordability of electric vehicles for Indian consumers.

Power Electronics Is Becoming a Core Automotive Industry

Power electronics represents another technology area highlighted by Hyundai.

These systems manage the flow and conversion of electrical energy inside an electric vehicle.

Important components include:

inverters,

converters,

on-board chargers,

motor controllers,

and high-voltage control systems.

Power electronics directly influences:

vehicle efficiency,

range,

charging performance,

thermal management,

and overall drivetrain performance.

As the industry transitions from internal-combustion engines toward electric drivetrains, power electronics becomes increasingly central to vehicle engineering.

Rare-Earth Magnets Add Another Supply-Chain Challenge

Hyundai also highlighted rare-earth magnets as an area where India needs stronger domestic capability.

Permanent magnets containing rare-earth materials are widely used in high-performance electric motors.

Global production and processing capacity for these materials remains geographically concentrated.

This creates potential supply-chain vulnerabilities for automakers.

Disruptions involving rare-earth materials can affect:

electric motors,

electronics,

renewable-energy equipment,

defence technologies,

and several advanced manufacturing industries.

Developing domestic processing, magnet manufacturing and alternative technologies could therefore have strategic importance beyond automobiles.

India's EV Localisation Rules Are Becoming More Demanding

Hyundai's comments also come as India increases localisation requirements for parts of the electric-mobility ecosystem.

From September 1, 2026, new localisation requirements affecting traction-motor manufacturing and assembly for eligible electric buses and trucks under the PM E-DRIVE framework have taken effect.

The policy direction is clear.

India wants electric vehicles benefiting from government support to generate greater domestic manufacturing value.

This means manufacturers and component suppliers will increasingly need local capabilities in advanced electric drivetrain technologies rather than relying primarily on imported assemblies.

Hyundai Wants Industry to Master Critical Technologies

Garg outlined technology ownership as one of the industry's most important priorities.

The message to automotive suppliers is that localisation should move beyond replacing an imported component with a domestically manufactured equivalent.

Companies need to develop the capability to:

design products,

own intellectual property,

conduct research,

engineer manufacturing processes,

and continuously improve technology.

This distinction matters.

A company manufacturing a foreign-designed component under licence may create domestic production value.

A company that designs and patents the technology can capture significantly more long-term economic value.

R&D Investment Becomes Critical

Building domestic technological capability requires greater investment in research and development.

India already possesses a large engineering workforce.

Global automotive manufacturers operate major research, engineering and software centres in the country.

The next opportunity is to convert more of that engineering capability into Indian-developed technologies and intellectual property.

This could involve greater investment in:

materials science,

battery chemistry,

semiconductor design,

motor technologies,

power electronics,

embedded software,

artificial intelligence,

and advanced manufacturing.

Research partnerships between industry and universities could become particularly important.

Hyundai Expands Battery Research Across Indian Universities

Hyundai Motor Group has been expanding its academic research partnerships in India to support this objective.

Its Hyundai Center of Excellence network works with leading Indian academic institutions on battery and electrification technologies.

Research areas include:

battery cells,

battery-management systems,

energy density,

battery safety,

durability,

diagnostics,

new materials,

and electrification systems.

The network is advancing dozens of collaborative research projects across participating universities.

Such programmes can help connect academic research with real automotive engineering requirements.

India Needs to Move From Make in India to Design in India

One of the central themes of Garg's address was the need to broaden India's manufacturing ambition.

The country has made substantial progress through:

Make in India.

The next phase, according to Hyundai, should increasingly emphasise:

Design in India,

Engineer in India,

and

Create in India.

The distinction reflects a wider industrial-policy challenge.

Manufacturing creates jobs and production capacity.

Technology ownership can create:

intellectual property,

higher margins,

export competitiveness,

strategic independence,

and long-term industrial leadership.

India's automotive ambitions increasingly require both.

Component Suppliers Need to Move Up the Value Chain

The transition also creates a strategic challenge for India's traditional auto-component manufacturers.

Many companies have built successful businesses supplying:

engine parts,

transmission components,

castings,

forgings,

exhaust systems,

mechanical assemblies,

and other components for internal-combustion vehicles.

Electrification changes the component structure of the vehicle.

Some conventional components may become less important.

Others will disappear entirely from pure EVs.

At the same time, new opportunities are emerging in:

battery systems,

electric motors,

electronics,

sensors,

thermal systems,

semiconductors,

software,

and charging equipment.

Suppliers therefore need to reposition their capabilities.

Localisation Is Also About Supply-Chain Resilience

The argument for localisation is not based solely on reducing imports.

Recent global disruptions have demonstrated the strategic value of resilient supply chains.

Automakers have faced disruptions involving:

semiconductors,

shipping routes,

battery materials,

rare-earth elements,

and geopolitical trade restrictions.

A highly concentrated international supply chain can become vulnerable when one link is interrupted.

Domestic manufacturing provides automakers with additional sourcing options.

It can also shorten logistics chains and reduce exposure to international disruptions.

India Can Combine Scale With Engineering Talent

Hyundai believes India possesses several structural advantages.

The country already has:

one of the world's largest automotive markets,

a substantial manufacturing base,

a large engineering workforce,

competitive production costs,

and an established supplier ecosystem.

Combining these strengths with advanced technology development could allow India to compete more effectively in global markets.

The objective is not simply import substitution.

Domestic companies need to create technologies competitive enough to be exported globally.

Export Competitiveness Must Extend to Advanced Components

India already exports automobiles and components to numerous international markets.

However, future export growth could increasingly depend on the technological sophistication of those products.

Advanced components typically carry greater value than conventional mechanical parts.

Developing export capability in:

automotive semiconductors,

battery technologies,

power electronics,

electric motors,

software,

and advanced vehicle systems

could therefore improve both the size and quality of India's automotive exports.

This could eventually help reverse the trade imbalance highlighted by Hyundai.

Hyundai Calls for Indian Patents and Global Markets

Garg urged industry leaders to adopt a more ambitious innovation mindset.

The broader challenge can be summarised through several goals:

master critical technologies,

localise imported components,

create Indian intellectual property,

enter global markets,

and

integrate artificial intelligence across operations.

The emphasis on patents is particularly significant.

Patents can indicate that domestic companies are not simply manufacturing technology but creating proprietary innovations.

A stronger intellectual-property portfolio could improve the global competitiveness of India's automotive suppliers.

Artificial Intelligence Will Influence Automotive Manufacturing

AI is another technology expected to reshape the automotive industry.

Its applications extend across:

vehicle engineering,

manufacturing,

quality control,

supply-chain management,

predictive maintenance,

customer service,

autonomous driving,

and product development.

Indian automotive companies have an opportunity to combine the country's software capabilities with its manufacturing base.

This convergence could become an important competitive advantage.

The traditional boundary between automobile manufacturing and technology development is becoming increasingly blurred.

Localisation Could Create New Industrial Ecosystems

Building domestic capabilities in semiconductors and batteries would create economic activity extending far beyond vehicle assembly plants.

Battery-cell production requires ecosystems involving:

raw materials,

chemical processing,

electrode manufacturing,

cell production,

battery management,

pack assembly,

testing,

recycling,

and logistics.

Semiconductor manufacturing similarly requires:

design,

fabrication,

packaging,

testing,

specialised materials,

equipment,

and engineering services.

Power electronics creates additional opportunities across electrical components and advanced manufacturing.

Successful localisation could therefore generate entire new industrial supply chains.

Cost Competitiveness Remains Essential

Domestic production cannot succeed solely because products are manufactured in India.

Indian components must also remain competitive on:

cost,

quality,

reliability,

technology,

and scale.

If locally produced components are significantly more expensive or less capable than imported alternatives, automakers may struggle to remain globally competitive.

This means localisation programmes must ultimately create commercially viable industries rather than permanently depend on protection.

Scale, automation, R&D and manufacturing efficiency will therefore be critical.

Hyundai's EV Strategy Depends on Deeper Localisation

For Hyundai Motor India, localisation is directly connected with its own electric-vehicle strategy.

The automaker has launched the Creta Electric and is working toward broader EV participation in the Indian market.

Hyundai has indicated that it intends to progressively expand from premium electric vehicles toward more mass-market offerings as India's EV ecosystem matures.

Cost competitiveness will become increasingly important during this transition.

Local battery cells, packs, power electronics and drivetrains can help reduce costs while protecting the company from international supply-chain volatility.

Tamil Nadu Is Central to Hyundai's EV Manufacturing Strategy

Hyundai's Chennai manufacturing ecosystem is becoming an important base for its EV localisation programme.

The company has already established battery sub-assembly capability and is working on localisation of power electronics and other components.

Tamil Nadu has developed into one of India's largest electric-mobility manufacturing clusters.

The state hosts manufacturers across:

electric passenger vehicles,

two-wheelers,

commercial vehicles,

battery systems,

and automotive components.

A dense supplier ecosystem can accelerate localisation because component manufacturers can operate closer to vehicle plants.

India's Automotive Ambition Is Moving Toward Technology Leadership

The larger message from Hyundai is that India's automotive success over the next decade will be measured differently from its achievements over the previous one.

Manufacturing volumes will remain important.

Exports will remain important.

Domestic vehicle demand will remain important.

But technological ownership will increasingly determine where the highest value is created.

India can assemble millions of electric vehicles.

The more strategic question is how much of the:

battery,

semiconductor,

motor,

electronics,

software,

and intellectual property

inside those vehicles is developed domestically.

Conclusion

Hyundai Motor India's call for domestic capabilities in semiconductors, EV battery cells, rare-earth magnets and power electronics highlights the next major challenge facing India's automotive manufacturing industry.

India has already achieved substantial manufacturing scale, but FY26 auto-component trade data show the country exported around $24 billion of components while importing approximately $25.4 billion, leaving a $1.4 billion deficit.

More importantly, many imports are concentrated in advanced technologies that will become increasingly valuable as vehicles electrify and digitise.

Hyundai Motor India CEO Tarun Garg is therefore calling for the industry to move beyond conventional localisation toward domestic design, engineering, R&D and intellectual-property creation.

The transition from Make in India toward Design in India, Engineer in India and Create in India could determine whether the country remains primarily a large automotive manufacturing base or develops into a global centre for future mobility technology.

Semiconductors, battery cells and power electronics will be central to that transition.

If India can combine its manufacturing scale, engineering talent and cost competitiveness with ownership of these critical technologies, the country's automotive industry could move substantially higher in the global value chain.