Indian auto: an export boom and a supply crunch

**Akshara** (0:04)
In today's episode, we'll break down an interesting story about Indian auto, an export boom and a demand crunch. Welcome back to The Daily Brief by Zerodha, where we cut through the noise to help you understand what's actually happening in the most important stories from business and markets. I'm your host Akshara, and today is Friday, 21st August. Coming to the first story.
So last year, India's electric car exports were so small that they didn't really show up in the trade data. This quarter, India's total exports came at 369 million dollars or approximately rupees 3500 crore. In Q1 FY26, the same number was just 22 million dollars. What's crazier is that almost all of that jump came from one car, which didn't even exist in the export numbers 12 months ago. We probably just witnessed a massive inflection point for Indian EVs, and things will only grow further from here. With this export boom, customers wanted more cars than factories could build. Raw material costs were climbing, and one supplier caught fire, and a few others were simply short-staffed. And in the middle of all of it, every major carmaker was spending heavily to add capacity, they couldn't fill fast enough. So in short, there was no shortage of action in Q1 FY27.
Let's dive into the nitty gritties of what the quarterly results have said. Now, India's electric passenger car exports went from barely 1,300 units in Q1 FY26 to over 10,800 units in Q1 FY27.
Europe alone accounted for most of it, with Spain the single largest buyer at over 4,000 units.
Now, almost all of this boom traces back to Maruti Suzuki's eVitara, which wasn't even part of India's car export base a year ago. And commercial shipments to Europe only began in August 2025, with just over 2,900 units. By March 2026, cumulative shipments had crossed 25,000 units. And by May, it passed 35,000 to 46 countries. So why Europe? It's no secret that Europe's demand for electric cars has been rising fast. Battery electric cars accounted for 19.4% of new EU registrations in the first quarter, up from 15.2% a year earlier.
But more importantly, India has a price advantage up its sleeve. See, Europe has long been complaining about an over-flooding of Chinese EVs. That's why the EU has added an extra tax of up to 35.3% on Chinese-made electric cars since October 2024, on top of the normal 10% import duty. And India-built Suzuki pays only that normal 10%.
But none of this makes India an EV export powerhouse. India still barely makes its own EV battery cells. Most of what goes into Indian-made electric cars is imported, unlike China, which builds its own batteries and then exports the finished car. Now, what makes this export boom more interesting is that within India itself, the EVTARA has been quieter. Between January to May 2026, Maruti sold nearly 7,100 units domestically, which is less than the 10,800-plus exported in a single quarter. Domestic sales peaked in March at 2,254 and eased off since. Well, it could partly reflect the fact that India's EV infrastructure is not as developed as Europe's. Plus, Suzuki always planned to send most of the production overseas, since the Gujarat factory serves 46 countries and not just India. But what about Maruti's peers? Tata, Mahindra and Hyundai don't hold a candle to its export numbers, but not because their cars are bad.
Tata sold more than 92,000 EVs in FY26, but its international growth has mostly been a story in one country, South Africa. Mahindra, meanwhile, has strong electric SUVs, but nothing at EVitara's export scale. Hyundai already makes EVs in other countries, so it doesn't need India as the source for a European electric car, the way Suzuki does. But exports go well beyond EVs too.
Maruti's overall exports grew 28.6%, even as the rest of India's passenger vehicle industry saw exports fall 8.4%, helped by a spread across nearly 120 countries that cushioned the West Asia conflict's impact on its Middle East shipments. But Hyundai had no such cushion. Its own exports fell nearly 20% from 48,140 units to 38,708 directly because of the same conflict, and that shortfall is a real part of why its overall numbers came in the way they did this quarter, not just a side detail. Now, the Evatara fits the same pattern from a different angle. Producing cars in India for Europe improves factory utilization and diversifies where demand comes from, which is genuinely useful. But it also creates dependence on shipping routes, destination market regulation, and geopolitical instability that no Indian carmaker controls. The same process that opened this opportunity for Maruti is what left Hyundai's Middle East business exposed this quarter. Now, some of these numbers also reveal how each of the four big carmakers is approaching EVs very differently this quarter. As we covered briefly last quarter, their approaches are quite divergent. Tata, for instance, has been selling electric cars in India longer than anyone else. It sold a record 34,000 plus EVs in Q1, which is roughly a fifth of its total sales, and still holds more than 40% of the Indian EV market. Two of its models, the Nexon and the Harrier, also earned Rs. 313 crore under the government's PLI scheme, which pays companies a subsidy for manufacturing cars with a high share of locally made parts rather than just putting together imported components. Mahindra, in contrast, only started selling its electric SUVs about a year ago. And in that time, EVs have gone from to 12% of what Mahindra sells, against about 9% for the industry, and volumes grew 77% here on year.