Electric Vehicle Industry in India Shows Promising Growth

The electric vehicle (EV) industry in India seems to have entered the fast lane. New models are hitting the market, charging infrastructure is expanding and sales are rising. India’s EV industry is gaining momentum as automakers race to capitalize on this emerging market.

In 2024, nearly 100,000 EVs were sold in India, reflecting a 20% increase from the previous year, while total light vehicle sales reached about 4.9 million units. Even a slowing passenger car market with year-over-year car sales growth at its lowest in four years at just 4% in 2024 could not slow EV sales.

In terms of volume, EV sales in India are still low compared to countries such as mainland China, the United States or some countries in Europe. However, if current momentum in demand can be sustained — at a time when many international markets are grappling with lower-than-expected BEV demand and pushback from investors — India could attract more foreign investments and garner recognition as a potential EV market of the future.

Affordability is one of the top drivers of EV demand. Although EVs in India cost more than internal combustion engine (ICE) cars with similar specifications and features, the price gap is narrowing thanks to increasing competition and government incentives.

Last year, the Indian government approved a new EV policy to attract investments from global EV companies and promote local manufacturing. The policy reduced customs duty on importing electric cars as completely knocked down (CKD) kits was from 70% to 15%, subject to cars with a minimum cost, insurance and freight (CIF) value of $35,000 and above, for a period of five years. However, the duty cut is only applicable for car companies committing to invest a minimum of $500 million and set up an EV manufacturing plant in India within three years from the issuance of the approval letter by the Government's Ministry of Heavy Industries.

The Indian government continues to offer new incentives for the electric vehicle industry in India to encourage investors. In its budget for fiscal year 2025–26 presented Feb. 1, the government announced that key materials such as cobalt powder, lithium-ion battery waste and scrap, lead, zinc and 12 other critical minerals will be fully exempt from basic customs duty.

These exemptions are expected to reduce the manufacturing costs of EV batteries in India, , helping to build a strong automotive supply chain. The Indian government already offers incentives under its Production Linked Incentive scheme to support the local production of EV batteries.

According to S&P Global Mobility’s Global lithium-ion battery cell production capacity tracker, India is forecast to have more than 30 GWh of annual lithium-ion cell production capacity by 2030, compared to almost non-existent capacity currently. Tata Group’s Agratas Energy Solutions will likely have the biggest production capacity in India, with Exide Industries and Log 9 Materials also having operational plants before the end of the decade.