New Delhi – The Indian electric vehicle (EV) sector must prepare for a future without government subsidies, according to Kamran Rizvi, Secretary of the Ministry of Heavy Industries. Speaking at the 66th SIAM Annual Convention in New Delhi on September 3, Rizvi emphasized that while government support has been crucial, it will eventually conclude, necessitating the industry to stand on its own.
The Evolving Landscape of EV Subsidies
Rizvi noted that government backing and subsidies for electric mobility are already phasing out in certain segments. “The first kick that will happen is that subsidies, government support, will come to an end. And in fact they have come to an end in some segments,” he stated.
Despite the impending withdrawal of financial incentives, India's EV transition has achieved substantial momentum. Electric three-wheelers, for instance, now constitute approximately 50% of all three-wheelers sold, significantly surpassing the government's earlier target of 10% by 2026. Rizvi projected this figure could reach 75% within the next two to three years.
Momentum in Key EV Segments
- Electric Two-Wheelers: Currently account for around 7% of total sales.
- Electric Cars: Have reached approximately 4-5% of the market.
- Electric Buses: This segment is experiencing robust demand, with manufacturers struggling to meet the volume of orders. India aims to electrify about 1.5 lakh public transport buses and roughly 10 lakh privately owned buses. The government anticipates 160 cities will adopt electric buses under the Payment Security Mechanism over the next two to three years.
Electric Trucks: The Next Frontier
Looking ahead, Rizvi identified electric trucks as a significant new opportunity for the industry. While only about 100 electric trucks received support under the FAME-II scheme, their economic viability is rapidly improving.
Projections suggest that electric trucks could account for at least 25% of sales in the heavy category within the next five years. Rizvi added that 55-tonne electric trucks are already proving more profitable than their diesel counterparts.
Government's Role in Building the EV Ecosystem
India's journey towards electric mobility has been bolstered by a series of government interventions. These include the FAME-I and FAME-II schemes, the Production Linked Incentive (PLI) scheme, and initiatives supporting advanced chemistry cell manufacturing.
The primary challenge now, as Rizvi articulated, is to ensure the sector's continued expansion and sustainable growth as government support diminishes and electric vehicles become increasingly commercially viable without external aid.