Why India must drive the future with EVs

India is the world’s third-largest automobile market, contributing nearly 7% to GDP and supporting millions of livelihoods.

- Amitabh Kant

But the sector stands at a pivotal inflection point. A global technological transformation is rapidly shifting the auto industry away from internal combustion engines (ICE) towards the final frontier of innovation — electrification. And this transition is accelerating faster than many expected.

Globally, the shift to electric vehicles (EVs) is undeniable. According to the International Energy Agency's Global EV Outlook 2025, over 50% of new cars sold in China last year were electric. Europe has surpassed 20%, and the US has reached 10%. This is no longer a niche trend: It is the new industrial reality. The reasons are clear: the need to meet climate targets, improve air quality, and foster green industrial growth. With zero tailpipe emissions and nearly three times the efficiency of ICE vehicles, EVs are central to this transformation.

To its credit, India has taken important steps. Over the past decade, the government of India has invested more than 275,000 crore in EV-supportive policies through initiatives such as FAME, PLI, PM E-Bus Sewa, and the recently launched ₹10,900 crore PM E-DRIVE scheme. State governments have also introduced incentives and EV-friendly policies, reinforcing the national vision.

These efforts are beginning to show results. In 2024-25, EVs accounted for 6.1% of two-wheeler sales, 23.4% of three-wheelers, 2% of passenger cars, and 5.3% of buses —an overall market penetration of 7.5%. While encouraging, this is still far from sufficient. To meet climate goals, reduce oil imports, improve air quality, and remain globally competitive, India must dramatically accelerate this transition.