India’s automotive market is undergoing a dramatic transformation, with electric vehicles (EVs) driving unprecedented growth in what is already one of the world’s largest mobility sectors, according to a report by Accel.
The market, currently valued at $138 billion, is projected to nearly double to $260 billion by 2030. This explosive growth is primarily driven by EVs, which are expected to grow at a compound annual growth rate (CAGR) of 21.8%, nearly three times faster than the modest 8% growth projected for traditional internal combustion engine vehicles.
The electric revolution is most pronounced in India’s dominant vehicle segments: two- and three-wheelers. These categories, which represent the vast majority of India’s vehicle sales, are experiencing rapid electrification driven by compelling economics, urban practicality, and surging demand from commercial fleets.
Electric two-wheelers are spearheading this transition. Despite internal combustion engines still commanding the majority market share, electric penetration is expected to rise sharply—from today’s low single digits to nearly 20% by 2030. This represents a remarkable transformation in less than a decade.
Three-wheelers, the backbone of India’s delivery and last-mile transportation network, are also undergoing a significant change. Government subsidies and improved financing options for fleet operators are accelerating the adoption of electric alternatives, making them increasingly attractive for commercial use cases where the total cost of ownership is a key consideration.
This shift represents more than market growth. It signals India’s emergence as a global leader in sustainable mobility, with implications that extend beyond its borders.
Automakers have responded by accelerating their EV product pipelines. Companies such as TVS Motor and Bajaj Auto are reporting strong growth in electric sales, with TVS seeing a 44% year-on-year increase in electric two-wheelers and Bajaj more than doubling its electric scooter volumes in FY24.
At the same time, market leaders like Maruti Suzuki and Mahindra & Mahindra are experiencing a broader consumer shift toward premium vehicles, particularly SUVs and MPVs, which now account for a larger share of revenue.
A policy-driven shift
India’s EV expansion is underpinned by a combination of fiscal incentives and long-term industrial policy. The government has deployed a range of schemes to encourage domestic manufacturing and reduce the sector’s dependence on imported technologies.
Programmes such as FAME I and II have subsidiszed the purchase of over 1.6 million EVs, while a third phase is expected to further accelerate adoption. More recently, the Production Linked Incentive (PLI) schemes have been extended to EV components, battery storage, and semiconductors, offering capital subsidies to manufacturers willing to invest in local supply chains.
Nearly ₹3,000 crore has been committed to auto components under the PLI programme, and. around ₹2,200 crore under the Advanced Chemistry Cell (ACC) initiative targets lithium-ion and solid-state battery packs. The India Semiconductor Mission, with an outlay of ₹76,000 crore, aims to address one of the sector’s most pressing vulnerabilities: dependence on imported chips.
Despite these initiatives, the report notes that India remains significantly reliant on imports for key technologies. From raw materials like lithium and cobalt to power electronics and battery management systems, most high-value EV components are still sourced from abroad. While India has achieved scale in EV assembly, the underlying intellectual property and hardware are mostly foreign-made.
Supply chain bottlenecks remain
The transition to EVs has exposed gaps in India’s industrial base. Although assembly capacity has grown in recent years, particularly in southern states like Tamil Nadu and Karnataka, India continues to lag in areas such as semiconductor design, motor controllers, high-efficiency inverters, and battery cell manufacturing.
A substantial portion of the EV ecosystem, including battery thermal systems, DC-DC converters, and control firmware, is still imported, often from China, South Korea, or Taiwan. As a result, India’s EV push remains vulnerable to external shocks in the global supply chain.
To address this, the report outlines a set of strategic whitespace opportunities for domestic innovation and investment. These include rare-earth-free motors to reduce dependence on imported magnetic materials, modular battery packs for fleet and commercial applications, smart battery management systems designed for Indian temperature and grid conditions, and auto-grade power electronics, a currently underdeveloped segment in India’s hardware stack.
Combined, these categories represent a $30 to $35 billion opportunity by 2030, according to the report.
Incumbents see post-COVID acceleration
India’s top auto companies have seen growth rebound sharply post-2020, as demand recovered and EV portfolios expanded. Between FY15 and FY20, most automakers posted modest single-digit growth. From FY20 onward, however, several reported double-digit compound annual growth rates driven by rising EV volumes and consumer premiumisation.
Mahindra & Mahindra saw revenue growth accelerate to over 21% CAGR since 2020, led by SUVs and electric three-wheelers. Eicher Motors, the maker of Royal Enfield, increased its motorcycle volumes from 602,000 to over 1 million units in just three years. TVS and Bajaj are capitalising on both traditional and EV two-wheeler growth, with rising exports supplementing domestic demand.
While ICE vehicles continue to account for the majority of volumes, especially in rural and long-distance categories, the center of gravity is shifting. Many manufacturers now view electrification not as a niche, but as a competitive requirement, particularly in urban markets, last-mile logistics, and public transport segments.
A longer-term bet on platform sovereignty
Beyond market share, India’s EV strategy is also motivated by energy security and long-term economic planning. Transportation accounts for about 45% of the country’s oil consumption, and reducing this reliance is a key policy objective.
The shift to EVs is seen not only as a response to climate goals, but also as a hedge against global fuel price volatility and supply disruptions.
The government is also seeking to replicate the success of the mobile phone manufacturing sector, where over 300 factories were established between 2014 and 2025, leading to $24 billion in smartphone exports last year. A similar approach is being applied to electric mobility, with an emphasis on domestic intellectual property, component ecosystems, and India-specific engineering.
The report points to growing interest in “India-edition” EV appliances and systems, such as stabiliser-free electronics, high-temperature battery housings, and corrosion-resistant parts, as signs that localisation is not just about cost, but customisation for Indian conditions.
India’s automotive sector is nearing an inflection point. The coming years will test whether policy, market demand, and manufacturing capability can align fast enough to capture a meaningful share of the global EV opportunity. If successful, India could not only reduce its import dependence but also emerge as a leading supplier of affordable, scalable electric mobility for the world.
For now, the fastest growth is concentrated in two- and three-wheelers, where the economics, infrastructure, and consumer readiness are furthest along. But the foundations being laid across battery tech, semiconductors, and advanced manufacturing could set the stage for a broader transformation over the next decade.
Edited by Megha Reddy
