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Tuesday, 13 May 2025

India on the Electric Highway: Government Initiatives Fueling EV Growth

 May 2025 | Report Format: Electronic (PDF)

Thinking about going electric in India? Well, the government is making a big push to get more electric vehicles (EVs) on the road. They have rolled out a bunch of plans and incentives to encourage folks to buy and even build EVs right here in India. From helping manufacturers set up shop to making buying an EV cheaper, these policies are a game-changer. Moreover, with a prediction of India electric vehicle market size to reach USD 151.21 billion by 2030, and with ambitious goals such as having 30% of all vehicle sales be electric by 2030, it is clear that these government efforts are important for shaping the future of travel in India.

‘NITI Aayog predicts India’s EV market to grow at an impressive CAGR of 49% from 2022 to 2030.’

NITI Aayog: An Apex Policy Maker for India’s EV Market

In India, the government has introduced numerous initiatives across the entire EV value chain to incentivize production, purchase, and usage. Notably, in July 2023, NITI Aayog formulated a strategic roadmap for the expansion of electric mobility in India, aligning with the nation’s goal of achieving net-zero emissions by 2070.

To achieve its target of 30% EV sales penetration by 2030, NITI Aayog has established specific goals for different vehicle categories:

· 30% for private cars

· 70% for commercial vehicles

· 40% for buses

· 80% for two-wheelers

· 80% for three-wheelers

Furthermore, the government is striving for 100% local EV production under the ‘Make in India’ initiative.

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India Electric Vehicle Market Report

Government Initiatives Supporting EV Adoption

Beyond well-known schemes such as FAME India (Phases I & II), the Production Linked Incentive (PLI) Scheme, and the Electric Mobility Promotion Scheme (primarily for electric scooters or electric bikes, and 3-wheelers), the Battery Swapping Policy stands out.

Introduced to shorten lengthy charging times and improve EV efficiency by enabling the exchange of depleted batteries for fully charged ones, the initial draft of this policy was released in April 2022. This policy addressed the standardization of battery dimensions and specifications, particularly for two- and three-wheelers, as well as battery safety regulations, unique identification codes for each battery, recycling and refurbishment procedures, and potential subsidy mechanisms.

Other Government Initiatives

· The extension of customs duty exemptions on imported machinery and equipment for manufacturing lithium-ion cells for electric car batteries in the Union Budget 2023–2024.

· Both commercial and private battery-operated vehicles are granted green license plates and are exempt from permit requirements.

· The Goods and Services Tax (GST) on electric vehicles has been reduced from 12% to 5%, and the GST on EV charging stations has also been lowered from 18% to 5%.

· Due to continuous government efforts, 12,146 public EV charging stations are operational nationwide.

· Waiver on road tax for EVs aims to decrease their initial cost.

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https://www.grandviewresearch.com/industry-analysis/india-electric-vehicle-market-report/request/rs1

Benefits of Government Policies and Incentives for EV Adoption

How State Governments Are Powering the EV Push with Bold Policies

While the central government plays a crucial role in setting the overall direction for EV adoption, state governments are emerging as key drivers of this transition by implementing progressive and often tailored policies.

Tamil Nadu: This southern state has positioned itself as an EV manufacturing hub by offering attractive EV production and component manufacturing incentives. Their policies often include subsidies for consumers, particularly for electric two-wheelers and three-wheelers, as well as support for developing charging infrastructure within industrial parks and urban areas.

Maharashtra: A leading automotive manufacturing state, Maharashtra has proactively promoted EV adoption through demand-side incentives, including subsidies and tax exemptions for EV buyers. The state also focuses on establishing a robust charging infrastructure network across major cities and highways, often through public-private partnerships. Furthermore, their policies encourage the electrification of public transport fleets.

Delhi: Faced with severe air quality challenges, Delhi has been at the forefront of promoting EV adoption through a comprehensive EV policy. This includes significant purchase incentives for various vehicle segments, a focus on deploying public charging infrastructure, and mandates for the electrification of government fleets and last-mile delivery services. The state has also implemented innovative measures such as “switch Delhi “ campaigns to raise awareness and encourage EV adoption.

Beyond these frontrunners, several other states are actively contributing to the EV push:

Gujarat: Similar to Tamil Nadu and Maharashtra, Gujarat offers EV manufacturing and purchase incentives, aiming to attract investment and promote local production.

Karnataka: With a strong technology ecosystem, Karnataka focuses on research and development in the EV sector and offers incentives for EV startups and manufacturing.

Kerala: This state has been promoting the adoption of electric three-wheelers and is working on developing charging infrastructure, particularly through its electricity board.

Uttar Pradesh: Recognizing the potential of a large consumer base, Uttar Pradesh offers subsidies for EV purchases and focuses on developing charging infrastructure along major highways and in urban centers.

These proactive policies at the state level, characterized by demand-side incentives, supply-side support for manufacturing, and a focus on building enabling infrastructure, are creating a positive momentum for EV adoption across India. By tailoring their approaches to their specific contexts and strengths, state governments play a crucial role in powering India’s transition towards a cleaner and more sustainable mobility future.

Future of Electric Vehicle Charging Technology in India

Looking ahead, India’s EV market is poised for significant expansion, driven by government incentives, decreasing battery costs, and increasing consumer awareness. A wider range of models with improved range and charging speeds will likely enter the market. The focus on local manufacturing and the development of charging infrastructure will be crucial in overcoming current hurdles. As India strives for its net-zero emissions goal, the growth of the EV sector appears inevitable, promising a transformation in urban mobility and energy consumption. Considering all this momentum, could electric vehicles become the undisputed backbone of transportation in India’s future?