One of the most significant developments for the global electric vehicle industry has been the swearing-in of President Donald Trump, a leader who has historically shown little support for electric vehicles. This change in leadership is likely to create ripple effects across the globe, potentially shaking the foundations of the EV industry. For India, this presents an uphill task to maintain its momentum in EV adoption despite these external headwinds.
With the Union Budget 2025-26 round the corner, stakeholders in India’s EV industry, particularly electric two-wheeler (e2W) manufacturers, are pinning their hopes on government stimulus to support the sector. The upcoming Budget may serve as an excellent opportunity to counteract the potential setbacks from the Trump administration’s policies.
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A case for higher EV adoption
EVs are gaining traction globally, driven by mounting concerns over air pollution, rising fossil fuel costs, and the urgent need to combat climate change. Their importance cannot be overstated, especially as the world witnesses the accelerating impacts of climate change.
While EVs are not a panacea for all climate-related challenges, they represent a crucial step toward a sustainable solution. For India, which faces significant climate risks, the rapid adoption of EVs is not just desirable but imperative.
India’s EV industry
To ensure the long-term sustainability of the EV industry, stakeholders have called for consistent policy support and investments in skill development. Among the key measures sought are:
Policy Support and Subsidies: Revitalising the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme and introducing targeted subsidies are critical to making EVs affordable in both urban and rural markets. Subsidies have historically played a pivotal role in driving adoption in India’s price-sensitive market.
Uniform GST Rates: Industry insiders have advocated for a uniform 5% GST rate across the entire EV ecosystem, including lithium-ion batteries, to reduce costs and make EVs more accessible.
Domestic Manufacturing: Strengthening domestic production of key components like batteries and powertrains is essential to reduce import dependency and boost self-reliance.
Charging Infrastructure: Expanding charging networks in both urban and semi-urban areas is crucial to support widespread EV adoption.
Electrification of Last-Mile Delivery: Policymakers must allocate resources to electrify last-mile logistics and mandate a 100% electric logistics fleet by 2030. Extending the GST structure for EVs to cover logistics services and introducing emission-based incentives can accelerate this transition.
Revitalising the PM E-DRIVE scheme
The PM E-DRIVE scheme has played a significant role in supporting the early growth of the EV sector. It encompasses support for electric buses, e-3 wheelers, e-rickshaws, e-carts, and e-2 wheelers, along with EV public charging stations and infrastructure upgrades. However, recent policy changes under the scheme have adversely impacted the two-wheeler segment.
Revitalising the scheme is essential to maintain the industry’s momentum. Overhauling its guidelines can boost investor confidence and provide a clear roadmap for growth. This will enable the industry to overcome challenges like declining funding and policy uncertainties.
Addressing infrastructure gaps
A recent KPMG report titled “Enabling Infrastructure Changes through Policies for Growth of EVs” highlights the critical role of infrastructure in accelerating EV adoption. India needs to address gaps in physical, power, economic, and social infrastructure to create a conducive environment for EVs.
Policymakers must prioritise investments in charging infrastructure, especially in semi-urban and rural areas, to ensure widespread adoption. Strategic investments in infrastructure will not only support the industry but also advance India’s transition to sustainable transportation.
Powering local manufacturing
Stakeholders have emphasised the importance of boosting domestic manufacturing capabilities, particularly for batteries and powertrains. Reducing reliance on imports and investing in self-reliance are crucial for the industry’s long-term success. Government policies that encourage local manufacturing and provide strategic incentives will be vital.
Despite the challenges posed by Trump’s presidency, India has the potential to transform these hurdles into opportunities. A proactive approach by the government in the upcoming Budget, addressing industry concerns and introducing targeted support measures, can help India sustain its EV adoption momentum.
Trump’s policies should serve as a motivation for India to double down on its EV goals. By addressing the sector’s needs and revitalising key schemes like PM E-DRIVE, India can pave the way for a robust and sustainable EV ecosystem. If the Budget delivers on these fronts, the country may successfully navigate the challenges and emerge stronger in its journey toward clean and green transportation.