TL;DR
The Indian government will discontinue EV subsidies for two and three-wheelers after the current fiscal year, shifting towards market-driven growth while extending incentives for electric buses and trucks.
The Indian government has announced its decision to not extend the existing subsidy scheme for electric two-wheelers and three-wheelers beyond the current fiscal year. This move marks a significant shift in India's electric mobility strategy, signaling a transition from direct purchase incentives to fostering market-driven growth.
Officials justified the decision for electric three-wheelers by citing their achievement of over 30% market penetration, suggesting subsidies are no longer necessary. However, the rationale is more debated for electric scooters, which still account for less than 10% of the overall two-wheeler market. Subsidies for electric buses and trucks have been extended until March 2028, indicating a prioritization of commercial and public transport electrification.
This policy change will compel manufacturers to innovate faster, focusing on more cost-efficient batteries, modular platforms, and flexible ownership models like battery leasing. While the long-term sustainability of the EV ecosystem may be strengthened, analysts caution that the immediate absence of incentives could temporarily slow down sales in the high-volume two-wheeler and three-wheeler segments, potentially impacting the national target of 30% EV penetration by 2030.
