India’s vehicle trade is a genuine export success. Its electrical-machinery trade — the chapter that houses EV motors, batteries and power electronics — is the opposite. As the fleet electrifies, the value that used to sit safely inside Chapter 87 starts migrating into the chapter India is worst at.
India makes and exports finished vehicles well. DGCI&S data puts Chapter 87 (vehicles other than railway rolling stock, and parts and accessories) exports at $25.97bn against imports of just $9.36bn in FY2025-26 — a net surplus of $16.6bn that has grown almost every year since FY2020-21. That is the payoff of two decades of ICE-era component manufacturing: engines, transmissions, chassis, forgings, castings — the mechanical value chain India industrialised around Maruti, Bajaj, TVS, Tata Motors and a deep Tier-1/Tier-2 auto-component base.
Chapter 85 — electrical machinery and equipment and parts thereof, which is where electric motors, battery packs, inverters/controllers and most power electronics are classified — tells the opposite story. Exports reached $53.98bn in FY2025-26, but imports were $104.85bn, a net deficit of $50.9bn that has been the largest single-chapter deficit in India’s entire trade account in most of the last five years.
The eight-year picture
| FY | Ch.87 exports ($M) | Ch.87 imports ($M) | Ch.87 net | Ch.85 exports ($M) | Ch.85 imports ($M) | Ch.85 net |
|---|---|---|---|---|---|---|
| 2018-19 | 18,096.3 | 6,159.4 | +11,936.9 | 12,727.8 | 52,048.9 | −39,321.1 |
| 2019-20 | 16,711.8 | 5,243.6 | +11,468.2 | 15,187.8 | 49,188.3 | −34,000.5 |
| 2020-21 | 13,640.3 | 4,619.2 | +9,021.1 | 14,213.9 | 46,691.6 | −32,477.7 |
| 2021-22 | 19,762.5 | 6,345.0 | +13,417.5 | 20,178.7 | 62,489.6 | −42,310.9 |
| 2022-23 | 21,219.9 | 7,197.9 | +14,022.0 | 28,608.6 | 67,637.3 | −39,028.7 |
| 2023-24 | 20,889.3 | 7,609.8 | +13,279.5 | 34,412.5 | 79,300.7 | −44,888.2 |
| 2024-25 | 22,648.4 | 8,259.2 | +14,389.2 | 44,049.6 | 88,596.4 | −44,546.8 |
| 2025-26† | 25,973.4 | 9,361.3 | +16,612.1 | 53,976.3 | 104,852.7 | −50,876.4 |
† FY2025-26 is provisional (DGCI&S TradeStat, data last updated 19 May 2026; retrieved 18 Jul 2026). Both chapters are HS 2-digit level, so Chapter 85’s deficit is not exclusively EV-related — it also carries mobile phones, consumer electronics, and general industrial electrical equipment. A finer HS-8 cut isolating just motors (HS 8501), traction batteries (HS 8507) and motor controllers/power electronics would sharpen the EV-specific share further; this post works at the chapter level available here.
Why this matters for EVs specifically
An internal-combustion vehicle’s value is mostly mechanical — engine, transmission, exhaust, fuel system — exactly the value chain sitting inside Chapter 87, where India already has scale, cost competitiveness and two decades of supplier depth. An electric vehicle swaps most of that mechanical value for an electric motor, a battery pack with its management system, and power electronics (inverters, DC-DC converters, onboard chargers) — all of which sit in Chapter 85, where India is a heavy net importer today.
That is the structural risk in the EV transition for India’s auto trade balance: the same unit shift from ICE to electric that keeps Chapter 87 volumes flowing can quietly move value out of the chapter India is strong in and into the chapter India is weak in, without the vehicle trade numbers themselves showing it — because a vehicle exported with an imported motor and an imported battery pack still counts as a Chapter 87 export.
The policy response already in motion
Government policy already treats this as a localisation problem, not just a demand-subsidy one:
- FAME II’s Phased Manufacturing Programme (PMP) conditions the demand incentive on progressive localisation of exactly the Chapter-85-coded components — motor, controller/inverter, onboard charger, DC-DC converter, wiring harness — rather than paying out for imported drivetrains.
- The PLI scheme for Advanced Chemistry Cell (ACC) batteries targets domestic cell manufacturing directly, since imported cells are the single largest line item inside a battery pack’s Chapter-85 import content.
- A 15% Basic Customs Duty on imported motors and power electronics (in force since April 2021) raises the cost of importing rather than localising the Chapter-85 content of an EV.
These are the right levers for the right problem. But the trade data says the gap they are trying to close is still widening in absolute dollar terms, even as India’s underlying vehicle-export machine gets stronger. Sustaining the Chapter 87 surplus through the EV transition means building Chapter 85 capability at the same pace India already built engine and transmission capability — not just continuing to assemble vehicle bodies around an imported electric core.
Sources: DGCI&S TradeStat, Commodity-wise Export and Commodity-wise Import reports (tradestat.commerce.gov.in/eidb), FY2018-19 to FY2025-26. Policy facts (FAME II PMP, PLI-ACC, BCD on motors/power electronics) are publicly documented government scheme provisions.
About this article: Researched, written and edited by Umashankar Triplicane Dwarakanathan, with AI research assistance; every figure is meant to trace to the primary source cited. See the Editorial Policy for how sourcing, AI use and corrections work.
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