- Collective efforts of government policy, infrastructure development and consumer engagement will be critical in establishing India as a major player in the burgeoning global EV market.
The Indian electric vehicle (EV) market is on the cusp of rapid growth, with projections indicating sales may reach between 3 to 4 million units by 2025 and approximately 10 million units by 2030, as reported by Niveshaay.
The anticipated growth reflects a compound annual growth rate (CAGR) of 35 to 40 per cent until 2027, positioning India as a significant player in the global EV landscape.
Currently, the market landscape in India is predominantly focused on the two and three-wheeler segments, which collectively constitute about 80 per cent of the total EV market.
The concentration underscores the demand for affordable and efficient electric mobility solutions in a country where a large portion of the population relies on these types of vehicles for daily transportation.
PLI schemes
The Indian government has proactively sought to strengthen local manufacturing and diminish dependency on imports through initiatives such as the Production Linked Incentive (PLI) schemes and the reduction of customs duties on essential minerals.
According to Arvind Kothari, the Founder of Niveshaay, the balanced approach to policy formulation is essential in navigating the challenges posed by limited charging infrastructure while facilitating market development.
As consumer awareness grows and fuel prices rise, it is estimated that EVs will account for 10 to 15 per cent of new vehicle sales by 2030.
The growth trajectory includes significant advancements in electric buses, commercial vehicles, and personal transportation. Furthermore, the prediction of over two million public charging stations pan-India highlights a commitment to developing robust EV infrastructure, which is crucial for widespread adoption.
Government’s commitment
The seismic shifts in budget allocations over recent years further demonstrate the government’s commitment to enhancing the EV sector.
Funding has risen dramatically, with allocations increasing from Rs10,000 crore in FY2019-20 for the FAME II scheme to Rs19,744 crore for the Green Hydrogen mission in FY2023-24.
The Union Budget for 2024-25 includes Rs2,671.33 crore under the FAME initiative and an additional Rs500 crore earmarked for the Electric Mobility Promotion Scheme (EMPS), specifically targeting the proliferation of electric two- and three-wheelers.
Additionally, the recent expansion of the PLI scheme for automobiles to Rs3,500 crore, alongside exemptions in customs duties for crucial battery production components such as lithium and cobalt, is anticipated to enhance the affordability of electric vehicles.
The government initiatives not only promote domestic manufacturing but also pave the way for India to emerge as a formidable contender against established players in the EV market.