An Adoption Faster Than the Framework
India’s EV Story So Far
India’s electric mobility transition has moved from policy ambition to market reality. By the end of FY2025–26, more than 2.55 million electric vehicles (EVs) were sold, representing year-on-year growth of approximately 25% and accounting for roughly 8% of all new vehicle registrations (around one in twelve vehicles sold). Calendar year data tell a similar story: about 2.3 million EVs were sold in 2025, also close to 8% of registrations. Figures in this paper are for the financial year (April–March) unless a calendar year is stated. EV adoption is no longer an emerging trend but a significant feature of India’s transport sector.
This expansion reflects a decade of sustained policy support: beginning with the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme in 2015 and continuing through FAME II, the Electric Mobility Promotion Scheme, and the current PM E-DRIVE programme, the central government has combined demand incentives, manufacturing support, and fiscal measures to accelerate adoption. These have been complemented by Production-Linked Incentive schemes for automobiles and advanced-chemistry cells, preferential GST treatment for EVs, and state-level EV policies across much of the country – together one of the most extensive frameworks for transport electrification among emerging economies.
Figure 1: India’s EV sales and penetration, FY2022-23 to FY2025-26.
Source: Vahan Dashboard, Ministry of Road Transport & Highways; sales and penetration figures compiled via EVreporter, Autocar Professional, JMK Research and the EV-Ready India Dashboard.
Market growth has been uneven across vehicle segments. Electric two-wheelers accounted for nearly 1.47 million sales in FY2025–26 and remain the principal driver of adoption. Three-wheelers have achieved even deeper penetration: electric models reached roughly a third of new high-speed (L5) passenger three-wheelers, which is the highest rate of any major vehicle class and account for a majority of new three-wheelers once predominantly electric e-rickshaws are included. By contrast, passenger cars remain at about 4.6% of new car sales, short of the 30% new-car penetration the government targets for 2030, and the electrification of heavy commercial vehicles is still nascent. The International Energy Agency records roughly 100,000 electric passenger cars sold in India in 2024, close to 2% of car sales and well below the levels reached in China or Europe; this car-specific figure sits alongside, and does not contradict, the much higher all-segment penetration driven by two- and three-wheelers. India’s transition has therefore concentrated in segments characterised by low acquisition cost, high vehicle utilisation, and relatively simple charging requirements.
Figure 2: India EV sales by category, FY2025-26 (share of total units). E-rickshaws, L5 passenger 3Ws and e-carts are all three-wheeler categories.
Source: EVreporter (Vahan Dashboard data).
The geographical distribution shows similar concentration. A small number of states – led by Uttar Pradesh, Maharashtra, Karnataka, and Tamil Nadu – account for the majority of EV sales, indicating that the transition remains dependent on local regulatory environments, infrastructure availability, and market conditions. National sales growth has been rapid, but adoption is far from uniform across regions and vehicle classes.
These patterns point to a broader structural question. Policy has focused largely on accelerating adoption through subsidies, manufacturing incentives, and sales targets; considerably less attention has gone to the institutional systems required to support a mature EV ecosystem. As adoption scales, grid integration, charging interoperability, battery-safety oversight, recycling and end-of-life management, consumer protection, data governance, financing, and market surveillance become increasingly consequential. The challenge facing India is therefore no longer primarily one of market creation but of institutional capacity.
The central argument of this paper is that EV adoption is advancing faster than the governance architecture intended to support it. India has succeeded in stimulating demand and expanding manufacturing capacity, but the regulatory, technical, and institutional foundations required for long-term system stability remain underdeveloped. The resulting gap is not yet visible in sales statistics, but it is likely to become more consequential as electrification deepens. Governance is walking while adoption is running. Addressing this governance deficit is critical to ensuring that the next phase of India’s transition is both economically efficient and institutionally sustainable.
Where Adoption Is Outrunning Governance
India has been effective on the demand side of electrification by lowering GST, offering two-wheeler subsidies, and setting sales targets, which have produced a rapid market response. The supply of governance that includes standards, surveillance, institutional coordination, and regulation that turn a wave of new vehicles into a durable system, etc., has not developed at the same pace. A subsidy can be disbursed within a quarter; building an enforcement regime, a recycling sector, or a grid-planning function takes years, and India began that work comparatively late.
That sequencing was, in part, a deliberate choice with a credible defence. For a price-sensitive market and a relatively late adopter of the technology, an adoption-first approach reduced the risk that premature or costly compliance requirements would suppress demand, raise vehicle prices, or constrain experimentation before the market had found its form; allowing volumes to build first arguably created the scale now needed to justify investment in standards, recycling, and grid upgrades. The argument here is not that governance should have preceded the market, but that the conditions which justified a light-touch approach are now expiring. As the fleet reaches tens of millions of vehicles, the cost of deferring institutional development rises, and several of the resulting risks cannot be retrofitted cheaply once they materialise.
Responsibility for the transition is distributed across several bodies. The Ministry of Heavy Industries administers the incentive schemes; the Ministry of Road Transport oversees safety standards and registration; the Ministry of Power and the Bureau of Energy Efficiency govern charging; the Central Electricity Authority is responsible for grid planning; and the Ministry of Environment frames the battery-waste rules. NITI Aayog convenes and benchmarks but has no line authority over the transition. Several agencies, therefore, hold partial responsibility while none is accountable for the system as a whole.
This fragmentation is not only a matter of administrative neglect; it also reflects India’s constitutional division of powers. Both ‘mechanically propelled vehicles’ and ‘electricity’ fall on the Concurrent List, shared between the Union and the states. Electricity tariffs are set by State Electricity Regulatory Commissions, distribution is run by state-owned DISCOMs, vehicle registration and road tax are administered by states, and charging-site and parking permissions are granted by municipal and urban-development authorities. Much of what appears as institutional fragmentation is therefore authority that is deliberately distributed across levels of government. Any proposal for stronger central coordination must work with that federal structure rather than around it – a point the roadmap returns to.
The unevenness extends to the rulebook. When NITI Aayog released its India Electric Mobility Index in August 2025, only three jurisdictions, which are Delhi, Maharashtra, and Chandigarh was qualified as front-runners; most states fell into the ‘aspirant’ category, and none scored full marks for preparedness. Independent analysis finds that only a handful of states have defined charging infrastructure targets, and that state EV-policy goals are frequently misaligned with the Centre’s own projections.
Figure 3: India’s electric-transport investment (2020-2025) against the capital required to meet 2030 targets.
Source: Institute for Energy Economics and Financial Analysis (IEEFA), 2026.
Financing illustrates the same lag. The IEEFA estimates that India deployed about ₹2.23 lakh crore in electric transport between 2020 and 2025, roughly 18% of the approximately ₹12.5 lakh crore required by 2030, leaving close to ₹10.3 lakh crore, or 82% of the requirement, still to be mobilised. Commercial EV borrowers face interest rates of 15-33%, which offsets the running-cost advantage that underpins the economic case for an EV. In insurance, the regulator has enabled usage-based, pay-as-you-drive cover, but thin residual-value benchmarks make premiums and total-loss settlements difficult to anchor. The financial architecture is still forming.
Five Major Regulatory Gaps
Five gaps stand out. None is a reason to slow the transition; each is a reason to strengthen its governance.
1) Safety standards on paper, surveillance in deficit
India strengthened its standards after the 2022 two-wheeler fires, replacing AIS-048 with the stricter AIS-156 for light EVs and AIS-038 (Rev 2) for larger vehicles, which require thermal propagation testing, battery-management-system protections, and traceability comparable to European norms. The weakness lies not in the standard but in what follows certification. India’s safety regime rests on type approval and factory-gate production compliance; it has little independent fire-incident investigation, limited in-market surveillance, and no open, legally binding recall mechanism for batteries already in use. NITI Aayog projects a cumulative battery demand of 600 GWh by 2030, and a standard that cannot be enforced at scale functions more as a commitment than a safeguard.
2) The end-of-life vacuum
The Battery Waste Management Rules, 2022, prohibit landfilling and place collection and recycling obligations on producers through extended producer responsibility. The targets are demanding: material-recovery rates for EV and portable batteries are to reach 90% by 2026–27, and later amendments add minimum recycled-content requirements and formally recognise second-life use. Implementation is the gap. India has no operational lifecycle-traceability system that would let a regulator follow a single battery from manufacture to safe recovery; formal, audited recycling capacity remains limited; and much end-of-life handling still passes through an informal sector with no environmental controls. The risk is strategic as well as environmental: India imports nickel, cobalt, and lithium, and a leaky recycling system converts a waste problem into a critical-minerals-security one. The first significant wave of EV batteries is now approaching the end of life, ahead of the infrastructure required to absorb it.
3) The grid and the distribution-utility gap
Vehicles and, more recently, public chargers have absorbed most of the policy attention; the network behind them has received less. Public charging has expanded quickly, reaching about 29,000 operational stations by early-to-mid-2025, but remains unevenly distributed and unreliable. India’s EV-to-charger ratio stands at about 1:235, against a global benchmark closer to 1:6 – 1:20, and roughly a fifth of installed chargers were non-functional according to data presented to Parliament, with many sites operating well below a quarter of capacity.
Figure 4: India’s public charging gap – EVs per public charging point versus the global benchmark.
Source: ratio from the Institute for Transportation & Development Policy, via AckoDrive; charging-station counts from the Ministry of Power / Bureau of Energy Efficiency and e-AMRIT, NITI Aayog.
The deeper issue is that the distribution companies that must carry EV load have not been preparing for it. The Central Electricity Authority has had to stress that accurate charging-demand data is needed to plan for and integrate that load. Only recently have instruments such as the draft National Electricity Policy and the Electricity (Amendment) Bill begun to introduce the framework a higher-EV grid requires – time-of-day and cost-reflective tariffs, smart charging, and vehicle-to-grid integration. These are following the vehicles rather than preceding them.
4) The gig economy: electrifying livelihoods without protecting them
Commercial and gig-economy fleets show the fastest adoption and the thinnest governance. Because delivery and ride-hailing vehicles travel four to six times the daily distance of a private commuter, states have identified them as high-impact targets. Delhi’s Motor Vehicle Aggregator and Delivery Service Provider Scheme, 2023, set app-based fleets on a path to full electrification through phased, category-wise targets and EV-only onboarding for bike taxis; Haryana has prohibited aggregators from inducting new petrol or diesel vehicles, with penalties of up to ₹1 crore; and platforms from Zomato and Swiggy to Flipkart and Amazon have announced their own 2030 electrification commitments.
These mandates, however, assume an ecosystem that does not yet exist. Because most gig workers own their vehicles, the mandates shift the cost of transition onto daily-wage earners who face limited financing options and a real price gap between petrol and electric two-wheelers. State-by-state variation in deadlines, definitions, and obligations also creates a compliance patchwork for national platforms and offers no uniform social protection for the workers affected. India is electrifying its gig fleets without a national framework for the labour-market and just-transition consequences.
5) A fragmented institutional core and unresolved data governance
The fifth gap connects the others. As noted above, no single body owns the EV transition, and the connected, data-generating character of modern vehicles has outpaced the rules. The Digital Personal Data Protection Act, 2023, with its 2025 rules, treats large fleet operators and OEMs as potential significant data fiduciaries and provides for penalties of up to ₹250 crore. Every EV now generates telemetry, location, charging-behaviour, and driving data. But the DPDP Act is a horizontal, general-purpose statute and does not resolve the sector-specific questions connected to mobility raises: who owns the data a vehicle generates – driver, owner, manufacturer, or platform; on what terms it may be monetised, for instance by insurers setting behaviour-based premiums; and how location data, which can enable theft or stalking, is protected at the point of collection. Layered onto the institutional fragmentation described earlier, this leaves a transition whose hardware is advancing faster than its rules for coordination and data.
What Other Countries Are Doing Better
The relevant lesson from earlier adopters is less about the size of their subsidies than about sequencing: they more often built the rules before the volumes arrived, pairing ambition with governance that was binding, traceable, and enforceable.
The clearest example is the European Union’s Battery Regulation. From February 2027, every EV and industrial battery above 2 kWh sold in the EU must carry a digital ‘battery passport’, which is a QR code accessible record of material composition, carbon footprint, supply-chain due diligence, recycled content, and state of health. This is the lifecycle traceability that India’s battery waste rules aspire to but have not achieved, and it makes safety, recycling, and critical-minerals responsibility a property of the product rather than something a regulator must reconstruct after the fact.
China combines strong vertical integration with the standardisation India has tended to avoid. This includes shared technical standards, an increasingly traceable recycling system, and national norms for battery swapping that let interoperable networks scale as new-energy vehicles approach half of domestic car sales. The United Kingdom has regulated smart charging and trialled vehicle-to-grid integration to make EVs an asset to the grid rather than only a load; the IEA singles out both China and the UK for this kind of deployment. Norway, the most electrified car market in the world, illustrates the value of predictability. A stable, long-term package of incentives and infrastructure commitments that gave consumers and industry the confidence to commit.
These models do not transfer wholesale, and the comparison is useful only if that is acknowledged. China’s approach rests on degrees of state capacity, industrial coordination, and vertical integration that India does not possess, and its swapping standards were imposed in a very different political economy. Norway’s results were enabled by a small population, high incomes, and the fiscal capacity to forgo large vehicle-tax revenues, conditions a lower-income, fiscally constrained market cannot replicate. What travels across contexts is not the specific instrument but the underlying principle. Where interoperability standards are set early, lifecycle traceability is built into the product, and grid integration is treated as a regulatory task rather than an afterthought. India’s task is to adapt those principles to its own fiscal and federal constraints, not to import the models that produced them.
The Risks of Delayed Governance
If the gap persists, several costs follow, some already visible.
The first is safety and confidence. A mass-market technology in tens of millions of hands, governed by a standard that cannot be enforced in the field, is exposed to a loss of consumer confidence in the event of a cluster of fire incidents, which is exactly the same dynamic that set back the two-wheeler market in 2022, at a larger scale.
The second is stranded capital. A charging network in which roughly a fifth of points are non-functional, and many run below a quarter of capacity, represents depreciating assets rather than usable infrastructure; in that light, ‘range anxiety’ is in part a symptom of a governance failure rather than a purely technical one.
The third is environmental and strategic. Without a functioning formal recycling system, the battery wave that underpins the clean-mobility narrative becomes a source of toxic waste and import dependence, with nickel, cobalt, and lithium leaking into the informal sector instead of returning to the supply chain.
The fourth is grid stress, as distribution networks not designed for concentrated, uncontrolled charging come under strain.
The fifth, and most consequential, is distributional: a two-tier transition in which the benefits accrue in one place while the costs and risks fall on the small firms and gig workers doing most of the work. A transition widely seen as inequitable is harder to sustain.
There is also a second-order risk. When governance lags a fast-moving market, the eventual correction tends to arrive abruptly – sudden bans, retrofitted rules, compliance shocks at short notice – and that kind of regulatory uncertainty deters the patient, long-horizon capital the transition most needs. The function of governance here is less to constrain the market than to stabilise it.
A Governance Roadmap for India
None of what follows requires India to slow adoption or increase subsidy spending; it requires the transition to be governed with the seriousness applied to selling it. The recommendations are grouped by how quickly they can be acted on – immediate administrative measures, regulatory reforms, and longer-term legislative and institutional change – to clarify the implementation pathway.
Immediate administrative measures
Several steps can be taken quickly under existing powers. The most urgent is in-market safety surveillance: independent battery fire investigation, routine market surveillance, and an open, enforceable recall procedure would convert AIS-156 from a one-time certification into a monitored safeguard. In parallel, distribution utilities should be directed to produce EV readiness plans, supported by the charging demand data the Central Electricity Authority has requested, ahead of wider electricity-law reform. The India Electric Mobility Index can also be turned from a scorecard into a lever, with central assistance and incentives tied to the gaps it identifies.
Regulatory reforms
A second tier requires regulatory change. The frameworks for smart charging, time-of-day tariffs, and vehicle-to-grid integration should be finalised and operationalised so that EVs become a grid asset rather than only a load, as the United Kingdom has begun to do. The financing architecture should be built deliberately: a national battery-health certification standard, a structured used-EV market to support resale values and credit, and a risk-sharing platform combining partial credit guarantees, residual-value protection, battery-as-a-service, and co-lending, which IEEFA estimates could bring borrowing rates from 15–33% towards 8–12%; independent analysts size the wider task at the order of 100 million EVs and close to three million public chargers by 2030.
An Indian ‘battery passport’, which is a digital lifecycle-traceability system modelled on the EU regulation, sometimes described as a ‘battery Aadhaar’, would integrate safety, recycling, financing, and critical-minerals oversight; combined with genuine enforcement of extended-producer-responsibility obligations and investment in formal recycling capacity, it would turn the battery-waste rules from aspiration into a system. The gig transition should be treated as a labour question, harmonising divergent state aggregator mandates into a coherent national framework and pairing each electrification target with financing, leasing, and social-protection instruments that protect the workers carrying it. A sector-specific data-governance code under the DPDP Act should clarify ownership of vehicle-generated data and the terms on which it may be secured and monetised. And the interoperability and battery-swapping standards NITI Aayog drafted in 2022 but left to stall amid industry opposition should be finalised – swapping suits a two- and three-wheeler-led market, but only with common standards.
Longer-term legislative and institutional reform
Underpinning all of this is the coordination problem, the hardest to solve because it is structural. A single statutory mission or inter-ministerial authority with genuine convening and decision-making power could hold the system together across the heavy-industry, transport, power, environment, and state-government silos that NITI Aayog’s soft coordination cannot. The design constraint is federal: because electricity and mechanically propelled vehicles sit on the Concurrent List, and tariffs, registration, and local permissions rest with state and municipal authorities, a central body cannot simply direct the states. Its influence would have to be built through instruments that work within Indian federalism, which includes conditional central funding, model standards and regulations, a GST Council-style forum for centre-state bargaining, and incentives tied to the mobility index rather than through hierarchy. One transition with one accountable owner, operating by cooperative rather than coercive means, would perform better than the present division of responsibility among several.
Conclusion
India has built one of the largest EV markets among emerging economies, moved electric mobility from the margins to the mainstream within a decade, and shown that determined demand-side policy can shift a market at scale. The next phase, however, poses a different problem from the last. With EVs selling in the millions, demand is no longer the binding constraint; the question is whether India can build the safety systems, recycling sector, grid planning, financing architecture, data rules, and institutional coordination required to make that adoption safe, equitable, and durable.
If the first phase of India’s EV transition was about accelerating adoption, the second phase will be about governing scale. The challenge is no longer persuading consumers to buy electric vehicles; it is building the institutions capable of supporting millions more.
The lesson is a familiar one in Indian public policy: ambition and expenditure are necessary but not sufficient, and what converts intent into outcomes is institutions that function. The vehicles have arrived; the task now is to let governance catch up with the road.