India: The Rise of Electric Vehicles in India

India’s Ministry of Heavy Industries and Ministry of Road Transport & Highways reduced the producer per-unit subsidy electric vehicles (EVs) from 40 percent to 15 percent of the manufacturer’s price. It created a momentary financial challenge to the EV manufacturers as the government reimbursement for manufacturing costs were reduced, leading to a slight increase in the unit cost of EVs for consumers. The decline in subsidy led to an initial drop in EV sales by 32 percent in June 2023. However, the Indian festive season from August to November coupled with the implementation of a low-cost EV model initiative by firms, helped to increase demand for EVs from August onwards. To continue to boost the production of EVs, a legislative committee has advocated for the extension of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) and Hybrid Vehicles program until March 31, 2027.