The Indian electric vehicle (EV) market is expected to grow in the range of 35 – 40 per cent CAGR till 2027, stated a report by Niveshaay. Currently, the Indian EV market is concentrated on the two and three-wheeler EV segment, which accounts for about 80 per cent of its vehicle market.
Arvind Kothari, smallcase Manager & Founder of Niveshaay, said, “The Indian government is aiming to boost local manufacturing and reduce import dependency. It has introduced Production Linked Incentive (PLI) schemes and reduced customs duties on critical minerals to boost local manufacturing. The balanced approach to policy support and market development is facilitating India to emerge as a remarkable contender in the global EV landscape, despite challenges like limited charging infrastructure.”
Projected sector growth for 2025 and 2030
Per the study, India is expected to record sales of around 3-4 million EVs annually by the year 2025. It added that EVs are expected to penetrate the market with approximately 10-15 per cent of new vehicle sales in India, and this would include two-wheelers, three-wheelers, and passenger vehicles. The growth, it added, will be driven by government incentives, rising fuel prices, and increased consumer awareness.
By 2030, annual EV sales are expected to exceed 10 million units, with significant increases in electric buses, commercial vehicles, and private cars. EVs could account for 30-40 per cent of new vehicle sales, supported by an anticipated network of over two million public charging stations across the country.
Budget Allocation
The government’s Budget allocations for the EV sector, over the last few years, has significantly contributed to EV Adoption, infrastructure as well as manufacturing. The Union Budget 2024-25 has allocated Rs 2,671.33 crore under the FAME scheme, primarily to cover remaining liabilities from FAME II. Additionally, the government has introduced Rs 500 crore Electric Mobility Promotion Scheme (EMPS) to boost electric two- and three-wheelers.
The increased PLI Scheme for Automobiles and Auto Components to Rs 3,500 crore and the exemptions in customs duty on lithium, cobalt, and other rare minerals to reduce battery production costs, via Union Budget, makes the electric vehicles more affordable.
With these government initiatives, India is set to become a significant player in the global EV market. While China accounted for 60 per cent of global EV sales in 2023, India’s large population and growing urbanization are fueling demand for affordable electric mobility. In contrast, the US and Europe, with EV penetration rates of approximately 7 percent and 14 per cent respectively, are concentrating on passenger vehicles and infrastructure development.
