The Ministry of Heavy Industries (MHI) has introduced a mandate requiring the domestic production of key electronic systems used in electric trucks - such as battery management systems (BMS), DC-DC converters, and vehicle control units (VCUs) - with effect from September 1st, 2026.

Compliance with these localisation requirements will be necessary for manufacturers to qualify for incentives under the government's e-truck subsidy scheme.

Issued on April 29th, the directive revises the phased manufacturing programme (PMP) for N2 and N3 category electric trucks. It strengthens localisation norms and progressively reduces reliance on imported control systems. The government has allocated Rs. 5 billion (US$ 52.6 million) for electric trucks as part of the broader Rs. 109 billion PM E-Drive initiative.

Shift towards component-level manufacturing

The updated norms indicate a transition from basic assembly to more comprehensive domestic manufacturing of electronic components. According to the notification, BMS production must now include the assembly of electronic parts - such as semiconductors and connectors - directly onto printed circuit boards (PCBs) within India.

Similar localisation requirements apply to DC-DC converters and VCUs. These include the domestic execution of processes such as wiring, connector installation, enclosure integration, and software or firmware flashing.

For DC-DC converters, the policy moves away from the integration of imported PCB assemblies towards complete assembly within the country, including component placement on PCBs.

Incentive structure and eligibility criteria

The scheme applies to electric trucks with a gross vehicle weight ranging from 3.5 tons to 55 tons. Subsidies are set at Rs. 5,000 per kilowatt-hour of battery capacity, capped at 10% of the vehicle's ex-factory cost (approximately US$ 60 per kilowatt-hour).

Under this framework, N2 category trucks can receive incentives of up to Rs. 270,000, while vehicles in the 7.5-12 ton segment may qualify for up to Rs. 360,000. In addition, buyers must scrap older vehicles to avail of the subsidy benefits.

Impact on domestic suppliers

The new norms are expected to benefit Indian component manufacturers and electronic manufacturing services (EMS) providers. As the industry transitions from importing assembled PCBs to full-scale domestic production, opportunities are likely to expand across semiconductor placement, assembly, and system integration.

Global suppliers currently exporting fully assembled systems may need to establish local manufacturing facilities or enter joint ventures to maintain their presence in the Indian market.

Short-term cost pressures may arise as domestic capacity develops. Over time, the policy is expected to support scalability, reduce import dependence, and enhance competitiveness in the commercial electric vehicle segment.

The notification outlines a defined transition timeline. Imports of BMS will be permitted only until August 31st, 2026. After this date, vehicles equipped with imported systems will no longer be eligible for government incentives.