November marked Delhi’s worst air quality in eight years, with the Capital failing to record a single ‘good air’ day in the year. A recent IQAir study, ‘World Air Quality Report 2023’, ranked India as the third-most polluted country, with 42 of the top 50 most polluted cities in the world, underscoring that the problem extends far beyond Delhi.
While India has made notable strides – such as promoting CNG vehicles and transitioning directly from BS4 to BS6 emission norms – these achievements have been overshadowed by the relentless growth in air pollution from several sources, including fossil fuel vehicles.
Accelerating adoption of zero-emission vehicles within India’s fleet has the potential to address air pollution issues permanently. This transition aligns with the global paradigm shift in the auto industry. Since 2019, major auto markets in Europe, the US and China have seen their EV market shares grow by a factor of five or more. Currently, EV sales comprise 10% in the US, 23% in Europe, and China now sells more EVs than ICE vehicles. Government policies have driven these shifts.
With a robust policy framework, India’s EV market share – currently 2% – could grow at a comparable rate. Companies like Tata and Mahindra have taken the lead, and are committed to the EV transition. They have made strategic investments in new EV models, battery plants and components. Suzuki and Toyota will soon launch EVs. Indian auto manufacturers have now realised that putting resources into conventional vehicle production is akin to investing in typewriters in a digital age.
Over the past decade, GoI has invested over INR 75k cr in FAME (Faster Adoption & Manufacturing of EVs), PLI, PM eBus Sewa and Electric Mobility Promotion Scheme (EMPS) to support EVs. States have also contributed through policies and tax incentives.
India now needs transformation at scale. Otherwise, these efforts will be undermined, relegating our auto industry to an industrial backwater and ceding the future of EV manufacturing, batteries and components to other major markets. The good news is that with relatively minor policy adjustments, India can accelerate its EV transition and catch up with leading markets. A few key things needed:
Goals and reviews: India needs to establish a national target to surpass major markets in the EV transition within a decade, aiming for 30% EV market share by 2030, and 60% by 2034. Biannual government progress reviews should be instituted, starting in 2026, with a strong commitment to strengthen policies as needed.
CAFE standards Bureau of Energy Efficiency (BEE) has proposed Phases 3 and 4 of CAFE (Corporate Average Fuel Economy) regulations for light-duty vehicles. However, these will delay India’s EV transition unless EV super credits are phased down over a specified timeframe, and super credits for fossil fuel cars, including hybrids, are eliminated. This will accelerate our shift towards EVs.
Credit trading: Several Indian OEMs like Tata Motors and Mahindra have expanded their EV portfolios. Maruti Suzuki will soon launch its EV. A credit trading system, where OEMs exceeding zero-emission sales targets earn credits and those falling short purchase them, would incentivise early adoption while giving lagging manufacturers time to adapt. Tesla’s success – earning over $10 bn from regulatory EV credits since 2018 – illustrates the vast potential of this model.
Set ICE phase-out and ZEV sales targets: A phased approach to phase out ICE is essential. Delhi-NCR could target ending new fossil fuel vehicle registrations by 2035. A similar approach should be implemented in the 42 most polluting Indian cities. OEMs should be mandated to ensure that 10% of their fleet comprises zero-emission vehicles (ZEV), with annual increases of 10% to reach 100% by 2035. This is necessary to ensure leadership in cutting-edge technologies and a better quality of life for our citizens.
India is a major global player in passenger car sales, with over 4 mn domestic sales and growing export leadership by Maruti and Hyundai. The country is also a global leader in 2- and 3-wheeler manufacturing, producing 21 mn units in 2023-24, with 17% exported to over 80 countries. The auto sector contributes 7% of GDP and generates significant employment. By 2030, the EV industry is projected to create 50 mn jobs.
Failing to transition from fossil fuel to EVs risks undermining India’s market position. Clinging to outdated technologies like ICE engines or hybrids could jeopardise economic prosperity. Decisive action is needed to remain competitive, safeguard public health and lead the global shift toward sustainable mobility.
