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New Delhi: India’s primary vehicle research and testing body plans to expand facilities that are focused on so-called new energy vehicles, seeking to keep pace with the government’s rapidly accelerating green mobility drive.
The Automotive Research Association of India (ARAI) will focus on electric and hydrogen-based powertrains or engines as well as research on vehicular emissions, according to two government officials, who declined to be identified.
“One of the two Chakan facilities will undergo capacity expansion… new facilities will be provided for the sector,” one of them said.
Currently, ARAI operates from three locations in Pune, Maharashtra—one on Vetal Hill in the heart of the city, and two at Chakan on the city’s outskirts. It also has a regional office in Chennai.
The auto testing and research body under the Union ministry of heavy industries saw its operational income in FY24 jump 20% year-on-year to cross ₹500 crore for the first time, driven by the government’s robust policy push towards green mobility.
A crucial part of ARAI’s plans includes a lifecycle analysis study on lithium-ion battery recycling, the association indicated in its annual report for FY24, published in September.
This comes amid rapidly growing electric vehicle sales in India even as EV battery costs are falling globally. EV sales in India surged to more than 1.3 million during April-November, up from about 1 million in the same period a year ago, the ministry of heavy industries informed the Lok Sabha earlier this week.
EV battery costs have had a downward trajectory in recent years. Goldman Sachs forecasted in October that EV battery costs would fall to $80 per kilowatt-hour (kWh) by 2026 from $153 per kWh in 2022.
Research on recycling lithium-ion batteries assumes importance as expending this would aid in India’s critical mineral security and reduce environmental damage from e-waste.
One lithium-ion EV battery typically lasts 4-5 years, depending on usage. Recycling EV batteries remains a challenge as the cost of recycling is higher than the revenue from reselling the metals in the battery, according to Deloitte report in June.
That said, recycling lithium-ion batteries is likely to reduce environmental damage as the components, which are typically discarded as e-waste, can be utilised to their optimum capacity.
Email queries sent to ARAI on 10 December and to the heavy industries ministry on 19 December did not elicit any response.
Also read | Most electric-car batteries could soon be made by recycling old ones
Key to localisation
ARAI procured multiple automotive facilities in 2023-24, including testing facilities for driver assistance systems, climatic chambers, and particulate measurement for emissions research, the company said in its FY24 annual report.
As a testing agency, ARAI enjoys a unique position. All industry participants are expected to work with ARAI to secure the necessary certification to participate in the Union government’s production-linked incentives scheme for automobiles and automotive components (PLI-Auto), as well as the PM E-Drive scheme.
ARAI is responsible for the most important part of the PLI-Auto scheme. The scheme’s primary objective is to boost indigenous manufacturing capacity, and only automakers that fulfil the scheme’s localisation requirements are certified by ARAI.
Also read | India’s PLI Auto scheme sees modest start with ₹500 crore claims in FY24
Under the PLI-Auto scheme, manufacturers must meet a 50% domestic value addition criterion—the localisation standards—to qualify for incentives. Domestic value addition (DVA) refers to the share of the domestically manufactured components used to produce automobiles and auto components under the PLI scheme.
In 2023-24, ARAI issued 39 DVA certificates, as per its annual report, indicating that it had a major role to play in doling out government incentives.
Testing agencies are key for the PM E-Drive scheme, the heavy industries ministry said in a notification dated 30 September. “In view of the increase in the number of EVs to be tested, there is a need to upgrade the facilities,” it said.
Also read | Policy tweaks drag sale of subsidized electric two-wheelers to three-year low
The PM E-Drive boost
ARAI also certifies vehicles that meet the localisation standards under subsidy schemes such as the PM E-Drive scheme.
Localisation standards under the PM E-Drive scheme and its predecessors FAME 1 and FAME 2 were included in the government’s phased manufacturing programme, which lists auto components that electric vehicle makers are allowed to import. The programme also includes a timeline on when these imports would be phased out.
FAME 1, or the first subsidy scheme to promote Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles, was launched in April 2015, followed by FAME 2 in April 2019.
The Union heavy industries ministry launched their successor, the PM electric drive revolution in innovative vehicle enhancement (PM E-Drive) scheme, in September this year with a financial outlay of ₹10,900 crore for two years.
Of this, ARAI, along with other testing agencies, is a beneficiary of a part of the ₹780 crore outlay under PM E-Drive scheme for capacity building of research and testing agencies.
Also read | Mint Primer | India changes gears to a new EV policy focus
“The distribution of this outlay has not been finalised yet but ARAI is the biggest and oldest among all testing agencies notified under PM E-drive,” said the second of the two government officials mentioned above.
Under the PM E-Drive scheme, four testing agencies—ARAI, International Centre for Automotive Technology (ICAT), Global Automotive Research Centre (GARC), and National Automotive Test Tracks (NATRAX)—can certify manufacturers for subsidies.
“Earlier, there were issues with the timelines for testing vehicles, mainly due to testing agencies being overwhelmed by the growing EV demand and the entry of numerous new OEMs across all categories, which has significantly increased the number of models,” said Alok Rai, director-public affairs, Society of Manufacturers of Electric Vehicles (SMEV), an industry body.
“The role of testing agencies has become much more critical now,” he said, “especially with the government’s focus on rapid localisation under the PM E-Drive initiative.”
Also read | Subsidies on e-scooters to slide to ₹5,000 per scooter in Oct 2025 under PM E-Drive
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