Electric Vehicle Industry in India

The global automotive sector is undergoing a crucial shift at present in trying to switch to alternative / less energy options. India, too is a country that is investing in this electric mobility shift. The key factors to these changes are the burden of oil imports, rising pollution as well as international commitments to combat global climate change are the driving factors for India's recent policies to faster the pace of transition to e-mobility.

Growth Targets

The Indian automotive sector is the 5th largest sector in the world and is predicted to be the 3rd largest by 2030. Since, India needs to cater to the vast domestic market, reliance on conventional modes of fuel intensive mobility won't be sustainable anymore. In order to address this issue, policymakers are developing a mobility option that is "Shared, Connected and Electric" for which they have projected an ambitious target of 100% electrification by 2030.

By making this shift, India seems to stand very strong on many fronts: it has relatively more renewable energy resources and availability of skilled manpower in technology and manufacturing sectors.

As per the data by CEEW Centre for Energy Finance, the electric vehicle industry in India will be USD 206 billion by 2030 provided India maintains its steady progress to meet its ambitious target. For this to achieve, a cumulative investment of over USD 180 billion in vehicle production and infrastructure to charge would be required.

Existing Electric Vehicle Scenario in India

India's Electric vehicle industry is at a beginning stage even after setting the ambitious target. However, India offers the largest untapped market in the world, especially when it comes to 2 wheelers. For improvements to happen a 100% FDI is being allowed in this sector.

Due to these changes, companies like OLA Electric Mobility, Ather Energy and Mahindra Electrics are rapidly increasing their presence in the market. Also, some states like Karnataka and Tamil Nadu are bringing in innovative and timely investor-friendly policies besides setting up the necessary infrastructure.

Recently, American giant Tesla Inc. marked its presence in India by incorporating its subsidiary, Tesla India Motors and Energy Pvt. Ltd., in Bengaluru. In February 2021, India's 1st intelligence EV manufacturer and a company with an annual production of 0.11 million 2-wheelers, Ather Energy, moved its USD 86.5 million factory to Hosur, Tamil Nadu from Bengaluru, Karnataka.


OLA India, too announced, setting up the worlds largest electric scooter plant in Hosur at a cost of USD 330 million, which aims to produce 2 million units a year. The target of OLA Electric is to scale up production to 10 million vehicles annually by 2022.

Other states like Andhra Pradesh, Uttar Pradesh, Bihar and Telangana have also shown positive developments in the expansion of production and charging infrastructure across the country in order to increase the uptake of electric vehicles.

Recently, India's leading engineering, procurement and construction company Sterling and Wilson Pvt. Ltd. announced the entry into electric mobility segment in India. It has signed a 50-50 joint venture with Enel-X, to create innovative charging infrastructure in the country.

The reasons to why only certain states are doing better than others are better logistics, investor-friendly government policies, business facilitation, supply chain connectivity and availability of land. Karnataka was the 1st state to introduce an EV policy and since then have emerged a hotspot for EV businesses in India especially in R&D. Tamil Nadu is also a state which is working at a great pace owing to larger land parcel, better supply chain ecosystem, proximity to ports and proactive investor support through administrative portals like Guidance Tamil Nadu.

Still while there is an upward trend in growth, it has much ground to cover in order to realize the ambitious target. In FY 2020, the sales of EV 2-wheelers in India increased by 21%. For EV buses, the sales increased by 50%. However, the scope of electric cars remained grim with a decline of 5%. After suffering an initial setback in 2020 due to covid, total EV sales appear to be slowly picking up. At the start of 2021, 15,910 units were sold in India out of which the maximum units were sold in Uttar Pradesh.

Growth Projections and Government Policy

According to a study by NITI Aayog and Rocky Mountain Institute, for road-based mobility, India can save up to 64% on its energy demand and cut down carbon emissions by 37% in 2030 if it works towards a shared, connected and mobility future. In this framework, it could lead to a reduction of 156 Mtoe in diesel and petrol consumption for a year with a net savings of INR 3.9 Lakh Crore.

The study also suggests that India's move towards 100% electrification by 2030 could create a USD 300 billion domestic market. India will account for almost two-fifths of global EV battery demand and the shift to clean energy could require an investment of USD 100 billion to set up 20 giga factories for battery production.

Titled 'India's Energy Storage Mission: A Make in India opportunity for globally competitive battery manufacturing', the report stated that the country's ambitious target for EVs is a "game changer" which can drive down the cost and scale up the production facilities at a faster rate.

In another report by NITI Aayog titled "India's Electric Mobility Transformation", states that the EV sales in India would be 70% for commercial cars, 40% for buses, 30% for private cars and 80% for 2 and 3 wheelers which if achieved could lead to a net reduction of 14 exajoules of energy and 846 million tons of carbon dioxide emissions by 2030. Sales of EVs by 2030 could save 474 million tons of oil worth USD 207.33 billion. This would overall lead to fulfillment of India's global commitments to lower carbon emissions and increase use of cleaner sources of energy required by UNFCCC.


Several policies have been put in place as follows -

* National Electric Mobility Mission Plan 2020 - Developed in 2013, as a roadmap for faster manufacture and adoption of EVs in India.
* Ministry of Power - This ministry clarified that charging EVs is considered to be a service and hence would not require a license. The ministry also issued a policy on charging infrastructure to enable faster adoption to EVs.
* Ministry of Road Transport and Highways - This ministry announced to provide green license plates to both commercial as well as private battery-operated vehicles and also these will be exempted from commercial permit requirement.
* NITI Aayog - The National Mission on Transformative Mobility and Battery Storage has been approved by the cabinet which aims to create Phased Manufacturing Program for 5 years till 2024 to support businesses.


* Lack of charging infrastructure in India - There were only 650 charging stations in India by 2019. This is one of the main reasons why customers do not opt for electric vehicles.
* The current price of EVs is high because higher cost of technology used in EVs. It is expected to have a rationalized pricing for EVs due to increase in R&D.
* Customers in India have a very limited range of products to choose from. Increased investment will make this sector more competitive in due course of time.
* In India, EVs have lower mileage and hence there is immense scope of R&D in this sector. Also, the reliance for imports of batteries and other components is another factor adding to the cost of EVs in India.
* Another main challenge is the grid challenges leading to the concern of price of charging an EV at private charging stations in India.


By - Shivang Jitendra Khare

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