India's electric vehicle (EV) market is experiencing rapid growth, driven by supportive government initiatives like the FAME scheme. This momentum reflects the country’s commitment to transitioning towards sustainable transportation. However, challenges remain, particularly concerning infrastructure development and the high costs associated with EV adoption. Despite these hurdles, India is on the brink of a transformative shift toward green mobility, paving the way for a cleaner and more sustainable future
The transportation sector in India is a significant source of air pollution and a major contributor to the country’s greenhouse gas emissions. As the third largest emitter of greenhouse gases, it accounts for 14% of India’s energy-related CO2 emissions, underscoring its critical role in the nation's environmental challenges. Addressing emissions from transportation is essential for improving air quality and meeting India’s climate goals. A 2021 study by the Energy Policy Institute at the University of Chicago (EPIC) highlighted the severe health consequences of air pollution in India, particularly in urban areas such as Delhi, where life expectancy could be shortened by up to nine years due to poor air quality. The study also revealed that all 1.4 billion Indians are exposed to pollution levels that exceed the World Health Organization’s (WHO) guidelines annually. Since the transportation sector is a key contributor to this pollution, reducing vehicle emissions is critical for improving both air quality and public health nationwide. Beyond New Delhi, cities across India face similarly dire air pollution challenges. Data from the Central Pollution Control Board (CPCB), which monitored 244 cities, found that 22 cities reported 'very poor' air quality, with levels exceeding 300, while 34 cities recorded 'poor' air quality, surpassing 200. These statistics underscore the urgent need to address emissions from the transportation sector, which is a major driver of pollution across the country. According to reports, the transportation sector is a significant contributor to air pollution, responsible for 20-30 percent of PM2.5 emissions in urban areas. As the country grapples with the escalating impacts of climate change - ranging from rising temperatures and erratic rainfall to an increase in extreme weather events - the urgency of addressing transportation emissions becomes evident. Transitioning to green mobility is a critical step in mitigating climate change by reducing the sector’s substantial greenhouse gas emissions. By embracing electric vehicles, clean fuels, and sustainable transport systems, India can work towards a more resilient and eco-friendly future while improving air quality and public health in its urban centers. “The demand for electric vehicles (EVs) has never been more critical, primarily driven by the global shift towards sustainable practices, the urgent need to combat climate change, and the growing urbanisation across the world. As cities expand and transportation needs grow, EVs offer a clean, efficient alternative to traditional internal combustion engines. Not only do they reduce carbon emissions, but they also lower the overall environmental footprint, addressing air quality and energy dependency issues. We believe that EVs are not just the future - they are the present,” says Uday Narang, Founder and Chairman, Omega Seiki.
Expanding market
According to Fortune Business Insights, the Indian electric vehicle (EV) market was valued at USD 8.03 billion in 2023 and is expected to grow significantly, reaching USD 23.38 billion in 2024 and an impressive USD 117.78 billion by 2032, with a projected compound annual growth rate (CAGR) of 22.4% during the forecast period. “India's green mobility sector is undergoing a significant transformation, fuelled by strong government policies, technological progress, and increased consumer awareness. The EV market is poised to experience substantial growth, with a projected compound annual growth rate (CAGR) of 40% by 2030. This growth is underpinned by substantial investments in local manufacturing and charging infrastructure,” says Anand Mimani, CEO, Greenline Mobility Solutions. India, currently the fifth-largest automobile market globally, is on track to become the third-largest by 2030, driven by the increasing demand for electric vehicles amid rapid population growth. In 2023, the EV market saw substantial growth, fueled by the government's supportive policies and initiatives. Uttar Pradesh emerged as the leader in EV sales, recording 2,77,837 units sold across all segments, followed by Karnataka with 1,52,324 units and Tamil Nadu with 90,241 units. Uttar Pradesh dominated the three-wheeler EV segment, while Karnataka and Maharashtra led in the two-wheeler and four-wheeler segments, respectively.
According to JATO Dynamics India’s report, a record number of new electric vehicle (EV) models are expected to be launched in India by March 2025. Despite the relatively low number of public charging stations across the country, the automotive industry is increasingly integrating electric cars into its future product lineup, reflecting a growing commitment to green mobility. The report further highlights that 25 battery electric vehicle (BEV) models are expected to be launched by 20 carmakers in India within the coming year. “Currently operating a robust fleet of over 500 LNG trucks, we aim to expand this fleet to 5,000 trucks in the next 2 years. While our primary focus remains on heavy trucking, we are also excited to announce the upcoming launch of our electric vehicle (EV) trucks for short-haul operations, further diversifying our offerings. A key aspect of our growth strategy revolves around innovation and sustainability,” says Anand Mimani. India's e-mobility sector has attracted substantial investments from a diverse range of stakeholders, including original equipment manufacturers (OEMs), development finance institutions (DFIs), non-banking financial companies (NBFCs), private equity firms (PEs), and venture capital funds (VCs). To further enhance investment opportunities, the government has fully opened the sector to foreign direct investment (FDI). Additionally, various DFI-led initiatives aimed at promoting private sector growth in emerging markets are increasing their involvement by providing low-cost capital and risk mitigation strategies.
Government support accelerating growth
India's green mobility sector is undergoing a rapid transformation, driven by a combination of governmental policy, technological innovation, and growing consumer awareness of the environmental and economic benefits of electric vehicles (EVs). To promote adoption of electric and hybrid vehicles, the government introduced Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME). Introduced in 2015, the government has approved Phase-II of FAME Scheme with an outlay of Rs. 10,000 crore for a period of 5 years commencing from 1st April 2019. This phase mainly focuses on supporting electrification of public & shared transportation, and aims to support through demand incentive 7090 eBuses, 5 lakh e-3 Wheelers, 55000 e-4 Wheeler Passenger Cars and 10 lakh e-2 Wheelers. Under Phase-II of FAME India Scheme, 2.31 lakhs Electric Vehicles have been supported till 01.02.2022 since 01st April, 2019 by way of Demand Incentive amounting to Rs. 827 crore (approximately). Under FAME India Scheme Phase-II, Phased Manufacturing Programme (PMP) has been introduced with the objective of domestic manufacturing of electrical vehicles, its assemblies/ sub-assemblies and parts/sub-parts thereby increasing the domestic value addition. “The Indian government has been pivotal in shaping the future of the EV industry through initiatives such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, Production-Linked Incentives (PLI), and various state-level incentives. These programs offer financial subsidies, tax benefits, and infrastructure development that encourage both manufacturers and consumers to embrace green mobility,” says Uday Narang.
The government is actively developing a comprehensive charging infrastructure nationwide to alleviate range anxiety for electric vehicle users. “To accelerate the growth of the green mobility sector in India, the government can implement several strategic interventions. First, expanding charging infrastructure and providing incentives for electric vehicle adoption are essential steps to encourage greater consumer uptake,” says Anand Mimani. Recently, the Ministry of Heavy Industries approved a capital subsidy of Rs.800 crore to three Oil Marketing Companies (OMCs) under the Ministry of Petroleum and Natural Gas (MoPNG) for the establishment of 7,432 public electric vehicle charging stations. Additionally, 148 EV charging stations have been sanctioned to various other entities under the FAME scheme. In conjunction with federal initiatives, several state governments are also offering extra incentives and subsidies to encourage electric vehicle adoption, such as reduced road tax, lower registration fees, and financial incentives for purchasers. Furthermore, the government has launched a Production Linked Incentive (PLI) Scheme for the automobile and auto component sector, with a budget of Rs.25,938 crore, aimed at providing financial support to enhance domestic manufacturing of advanced automotive technology products, including electric vehicles and their components.
Navigating challenges
Green mobility is increasingly gaining traction and is currently in its nascent stages of development. While the government has introduced a range of initiatives aimed at fostering the growth of green mobility in India, the sector continues to face numerous challenges that hinder its progress. These challenges encompass a variety of factors, including insufficient infrastructure, high initial costs for electric vehicles, and a lack of public awareness and acceptance. “India faces several significant challenges in its pursuit of green mobility, including inadequate infrastructure, high upfront costs for electric vehicles (EVs), and a heavy reliance on imported fossil fuels. These hurdles can impede the transition to a more sustainable transportation ecosystem,” says Anand Mimani. An industry expert notes that electric vehicles typically incur a higher initial purchase cost, largely due to the expenses related to battery technology. This upfront investment can deter budget-conscious consumers from making the switch to electric vehicles. The introduction of AI 156-I and AI 156-II standards in 2023, which focus on enhancing battery safety to mitigate fire risks, has posed challenges for the electric vehicle sector. While these standards contribute to global advancements in battery safety, they have also resulted in delays and confusion, adversely affecting the growth and adoption of electric vehicles in the country.
In addition to the existing measures, the government must proactively tackle the challenges related to charging infrastructure. This includes implementing regulations that require all new developments to incorporate electric vehicle (EV) charging points, which would significantly increase the availability of charging options. Furthermore, standardising charging connectors and protocols is essential to ensure compatibility across various vehicle models and charging stations, thereby simplifying the user experience. Fostering public-private partnerships for infrastructure development can also play a crucial role in enhancing the charging ecosystem. Such collaborations can leverage resources and expertise from both sectors, leading to more efficient and widespread deployment of charging stations. Additionally, exploring and piloting battery swapping models could effectively mitigate concerns related to range anxiety and lengthy charging times. By allowing users to quickly exchange depleted batteries for fully charged ones, this approach can enhance convenience and accessibility, making electric vehicles a more attractive option for consumers. These strategies, when implemented together, can create a more robust and user-friendly environment for electric mobility.
Path ahead
India is actively striving to reduce greenhouse gas emissions as part of its commitment to the Paris Agreement. As a participant in this global initiative, India joins approximately 200 nations in a concerted effort to lower GHG emissions and tackle the pressing challenges posed by climate change. The government's proactive measures have established a solid foundation for a thriving green mobility sector in the country, reinforcing India's dedication to sustainable and environmentally-friendly transportation solutions. As the obstacles to electric vehicle adoption gradually decrease, the momentum for green mobility is accelerating. This shift is not only fostering innovation within the transportation sector but is also paving the way for electric vehicles to potentially outpace traditional fossil fuel-powered vehicles in the near future. By embracing these changes, India is not only advancing its environmental goals but also positioning itself as a leader in the global transition toward a cleaner, more sustainable future. The commitment to green mobility reflects a broader vision for urban development and economic growth, ultimately contributing to a healthier planet for generations to come.
