Prime Minister's adviser Tarun Kapoor has highlighted how India's dependence on critical components can create significant supply chain vulnerabilities. Speaking at the 66th Annual Convention of the Society of Indian Automobile Manufacturers (SIAM), Kapoor emphasized that the shortage of heavy rare-earth magnets demonstrated how 'a country can hold us to ransom' over a small component. The crisis arose in April 2025 when China imposed export restrictions on seven heavy rare-earth elements and related magnets, disrupting production by Indian automakers who sought government intervention. According to reports from Business Standard, Kapoor stressed the need for India to move quickly to build manufacturing capacity for critical components where supply alternatives are concentrated elsewhere.
India has stepped up efforts in 2026 to reduce dependence on China for rare-earth magnets through a ₹7,280-crore manufacturing scheme and plans to create 6,000 tonnes of domestic capacity annually. As reported by Business Standard, Kapoor emphasized that such localization should be selective rather than an attempt to produce everything within the country. He noted that while India cannot become self-sufficient in every material, 'at least those critical items -- where we think that there could be a problem -- let us all think and then work together so that all that danger of getting into some kind of trouble goes away.'
Kapoor flagged semiconductors as another critical area requiring substantial domestic capacity growth. According to Business Standard, semiconductors are electronic chips that control several functions in modern vehicles, including electronic systems and powertrains, and their availability has become 'a bottleneck' for the industry. The government has launched the Semicon 2.0 programme with ₹1.25 lakh crore investment to build a complete and self-reliant semiconductor ecosystem, though Kapoor noted India will still need much more manufacturing capacity to meet domestic requirements.
Kapoor called for a faster shift towards electric vehicles, citing the West Asia crisis as making energy security more urgent. As reported by Business Standard, he highlighted that India's domestic petroleum resources are not enough to meet current requirements while demand for petroleum products is expected to continue rising. Under the PM E-DRIVE scheme, there is provision for 5,000 electric trucks, but Kapoor noted only around 150 have been covered so far, calling it 'a very small number.' He warned that 'more and more restrictions will come' for passenger vehicles, urging the industry to prepare for tighter electrification measures. Kapoor indicated that government measures could provide stronger push through restrictions, taxation policies and schemes aimed at replacing older commercial vehicles, with the government expecting the industry to come forward with ideas that could help scale the transition faster.
Kapoor pointed to the Parivartan scheme for the National Capital Region, which seeks to replace BS-I, BS-II and BS-III vehicles completely and BS-IV vehicles largely. According to Business Standard, while the scheme talks about moving to BS-VI vehicles, the government would prefer moving directly to electric vehicles instead of making it a two-stage transition. BS-VI emission norms were implemented nationwide on April 1, 2020, skipping the BS-V stage entirely to align directly with Euro 6 standards. The government is now in discussions with the industry to implement BS-VII norms from 2027. Kapoor emphasized that heavy vehicles, particularly trucks, are a key area requiring faster electrification, saying diesel dependence remained a major bottleneck for India, with the government needing to work with industry on financing models, battery swapping and highway charging infrastructure to bring down costs and make electric trucks more viable.
