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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.

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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.
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