Projections indicate that the Indian EV market, valued at USD 2 billion in 2023 could surge to USD 7.09 billion by 2025. Industry estimates also forecast the domestic EV market to achieve 10 million annual sales by 2030.
As per a recent search By 2030, electric two-wheelers could make up about 40 to 45 % of all EVs sold in India, and electric passenger vehicles could make up about 15 to 20%. However, as per government sources, the Indian government is aiming for EV adoption to reach 40% for buses, 30% for private cars, 70% for commercial vehicles, and 80% for two-wheelers by that timeline.
According to data from the government India’s electric two-wheeler market experienced a notable surge in sales in the third quarter of FY 2023-24 (Q3 FY 24) compared to the previous quarter (Q2 FY 24), with a 34.42 % increase. This uptick is also reflected by the robust sales in the ongoing fiscal – Q4 FY 24 – with 76,301 units sold.
Meanwhile, as per a recent survey a robust 49% compound annual growth rate (CAGR) in India’s domestic electric vehicle market between 2022 to 2030, with an estimated 10 million annual sales by 2030. Projections indicate that the EV industry is set to generate approximately 50 million direct and indirect employment opportunities within the next seven years.
Policies to Facilitate India’s Transition to Clean Mobility
- The FAME-II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India) Incentive Policy aims to encourage the widespread adoption of hybrid and electric vehicles by providing demand incentives to consumers (buyers/end users). These incentives result in an upfront reduced purchase price for eligible vehicles, and the government of India reimburses the OEMs (Original Equipment Manufacturers) accordingly.
The policy extends demand incentives to the following categories of vehicles:
-Buses (Electric Vehicle technology exclusively)
-Four Wheelers (Electric, Plug-in Hybrid, and Strong Hybrid)
-Three-wheelers (Electric), including Registered E-Rickshaws
- State Electric Vehicle Policies: Several Indian state governments have introduced their own policies to create an enabling environment for electric vehicle purchase and local manufacturing. Examples include Tamil Nadu, Telangana, Gujarat, Maharashtra, Haryana, Rajasthan, Chattisgarh, and Odisha, to name a few.
- Production Linked Incentive (PLI) Scheme for the automotive sector: This was launched in September 2021, with an outlay of USD 3.1 billion to foster domestic manufacturing of advanced automotive technology (AAT) products and attract investments in the automotive manufacturing value chain.? The scheme is divided into two parts: Champion OEM for electric or hydrogen-powered vehicles and Component Champions for high-value and high-tech components. It has attracted a proposed investment of USD 9 billion against the target estimate of USD 5.1 billion over a period of five years
- PLI Scheme for the National Programme on Advanced Chemistry Cell (ACC) Battery Storage: Launched in 2021 with an outlay of USD 2.1 billion over seven years (including a two-year gestation period), this PLI Scheme aims to enhance India’s manufacturing capabilities for ACC production. The incentives will be disbursed over five years based on the sale of domestically manufactured batteries. Currently, three companies have been selected with a manufacturing capacity of 30 GWh, with the second phase of the scheme set to be launched soon.
Key Insights
- Despite the upward trajectory of the Indian Electric Vehicle (EV) market, its penetration remains at 1.1% lower than the Asian average of 17.3%. This signifies substantial opportunities for EV manufacturers to align with COP26 objectives.
- The government demonstrates a strong intent to facilitate global EV manufacturers by potentially offering import subsidies, contingent upon meeting localization requirements.
- Foreign investors are encouraged to comply with localization prerequisites to capitalize on government schemes. Stringent verification measures are being established to ensure Original Equipment Manufacturers (OEMs) adhere to regulatory policies.
