Government Incentives To Drive EV Penetration In India: Moody's In a report, Moody's Investors Service said India has the fourth-largest car market globally, but electric vehicle (EV) penetration is currently only around 1%

By Teena Jose

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Pexels

Moody's has said that government incentives, including those to consumers, local battery manufacturing, state-level subsidies and cut in GST rates would help drive EV penetration in India, according to a PTI report. In a report, Moody's Investors Service said India has the fourth-largest car market globally, but electric vehicle (EV) penetration is currently only around 1%.

"We expect various government incentives will drive an increase in EV penetration. These include consumer incentives, production-linked incentives for advanced battery storage to drive local cell manufacturing, goods and services tax (GST) rate cuts, and other state-level subsidies," Moody's said in a statement.

The pace of increase in EV sales and towards the government's target of 30 per cent by 2030 will also depend on the country's charging infrastructure, and consumers' readiness to switch to EVs from traditional ICE vehicles, or those traditional engines powered by petrol, diesel, or natural gas, as per the report.

India has beaten Japan to become the third-largest vehicle market in 2022 after China and the USA. Last month, Union Minister Nitin Gadkari had said that if India can use the lithium reserves recently discovered in Jammu and Kashmir which is a crucial element in producing batteries that power electric vehicles, it can become the world's number one automobile manufacturer in the electric vehicle segment.

Earlier this week, Society of Manufacturers of Electric Vehicles (SMEV) on Monday said that Electric two-wheeler sales in India rose over two-and-half fold to 8,46,976 units in 2022-23 over the previous fiscal. Commenting on this development, Jayapradeep V, chief business officer of Raptee has said that, "The EV penetration in two wheelers which was negligibly at 1.8% in FY22 has achieved 4.6% in FY23 and in Q4 '23 it has peaked at 6.1%. And in the scooter segment the EV penetration in Q4 was almost 20% which is a remarkable achievement by all the EV players. It is interesting to note that there are 3 EV players in the Top 10 two wheeler players in India replacing few of the ICE players. All of these clearly indicate that the Electric vehicles adoption is really catching up in India with Mar '23 performance breaking the records for the Indian EV Industry and consumers are going for EVs for its superior ride experience and the improvement in the charging infrastructure. Once the EV Motorcycles which are slated to launch in FY24 are out in the market, the overall penetration will significantly jump and accelerate the transition further."

Teena Jose

News Desk Reporter with Entrepreneur India

Teena is a post graduate in financial journalism. She has an avid interest in content creation, digital media and fashion.
Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

News and Trends

No Outsourcing, No Shortcuts: The Rise of One of the World's Most Self-Reliant Business Groups

Nowhere is this more evident than in sectors like agriculture, logistics, and manufacturing industries, where the journey from raw material to finished product spans vast networks and countless hands.

News and Trends

Cyprus-based Maritime Companies Announce FDI of ₹10,000 Cr for the Indian Shipping Sector

The FDI is marked as the largest ever in the Indian shipping sector since this sector was opened to 100% FDI in the year 2005.

News and Trends

Samarsh Capital, Vyom Partners, Blue Lotus Lead INR 50 Cr Investment in Sai Parenterals

The fresh capital will be used to fuel its global expansion strategy, including acquisitions in regulated markets, enhancement of its manufacturing footprint, and diversification of its product portfolio.

News and Trends

Yulu Raises INR 25.7 Cr from Magna in Series B Round

The funding arrives at a key moment for the Bengaluru-based company, which is witnessing strong demand for its electric two-wheelers, especially in the last-mile delivery sector.

Starting a Business

'Absolute Freedom': Siblings Behind a Self-Funded 8-Figure Brand Reveal 3 Secrets Aspiring Entrepreneurs Should Know About Growth and Success

Rae and David Liu leveraged their complementary skill sets to start a business that's been profitable every year since launch.