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Informist, Thursday, Aug. 28, 2025

 

MUMBAI – There is a clear regional disparity in the electric vehicle adoption rate in India, with southern and western states showing greater adoption, partly due to robust infrastructure and early formulation of EV policies, according to a paper by the Reserve Bank of India staffers. The paper, which is part of the RBI's August bulletin, released on Thursday, said that even moderate policy support, combined with robust charging infrastructure, can drive EV adoption. 

 

The adoption of electric vehicles in India is crucial for meeting the country's decarbonisation goals, and state-level policies play a significant role in the adoption trajectory of electric two-wheelers, the paper said. Policy measures that influence the uptake of electric vehicles include financial incentives, tax waivers, and investments in charging infrastructure, particularly when designed to address the price-sensitive nature of the Indian market, it said.  

 

Of the top five leading states with robust charging infrastructure, three – Karnataka, Goa, and Maharashtra – were in southern and western India and the remaining two — Delhi and Haryana — were northern states. States such as Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, and Kerala have been providing capital subsidies ranging from 25% to 60% on the total cost of charging station equipment and components, as per the RBI paper. Delhi has a provision to sanction 100% grant on the purchase of charging equipment, it added.

 

Most state governments have been offering incentives on new electric two-wheeler purchases, including subsidies and fee waivers on tax and registration. However, a few states did not offer any additional subsidies beyond tax and registration fee waivers, the paper said. Inadequate charging infrastructure has been repeatedly highlighted as a barrier to EVs' long-term growth.  

 

In the six Indian states without additional subsidies beyond tax and registration fee waivers, the average EV adoption rate contracted by 24% sequentially in the September quarter of 2023, following the reduction of the subsidy under the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles scheme. On the other hand, the 17 states which offer additional subsidies saw the average adoption rate fall by 17% sequentially during the same period.

 

"This suggests that states providing higher levels of support helped cushion the impact of the subsidy reduction under FAME II, to some extent," the paper said. In June 2023, the government reduced the EV subsidy per electric two-wheeler to 15% of the ex-factory price from 40% under the FAME II scheme.

 

Reported by Anjana Therese Antony

Edited by Saji George Titus

 

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