In the latest report launched by NITI Aayog, the country’s top policy thinktank recommended a major strategic shift to accelerate the country’s transition to electric vehicles. The core message was simple—incentives alone are not enough; it’s time for a more focused, rule-based approach if we are ever to hit the target of 30 per cent EV sales in the next five years.
The report ‘Unlocking a $200 Billion Opportunity: Electric Vehicles in India’ was released this week by Rajiv Gauba of NITI Aayog in the presence of NITI Aayog CEO B.V.R. Subrahmanyam, Heavy Industries Ministry Secretary Kamran Rizvi, among other dignitaries.
Despite the Centre spending over Rs 40,000 crores on incentives through programs like FAME, electric vehicles currently account for just 7.6 per cent of annual vehicle sales. And India has set an ambitious target of crossing 30 per cent in EVs’ share of total vehicle sales within the next five years. NITIN Aayog, instead, argues for introducing “gentle mandates and disincentives.”
Remember how Delhi shifted to CNG in the 2000s—this is precisely what the central body is recommending, but for EV adoption. The new approach, however, wouldn’t target everyone at once.
The focus would be on ‘high-impact vehicles’ first—buses, trucks, and urban delivery vehicles. “Highway trucks and buses are a particularly important segment to transition to electric as they travel long distances in a day and require charging facilities at concentrated locations along highways,” the report read.
This small segment, making up just 4 per cent of India’s fleet, is responsible for over half of the CO₂ and particulate matter emissions from vehicles, NITI Aayog noted. By targeting them, India can achieve maximum environmental benefit with minimum disruption.
They also suggested a “saturation” model in the report: pick five cities and aim to make their entire public transport and urban freight fleets 100 per cent electric in five years, creating a successful template for other regions in India to follow.
Tackling the high upfront EV costs
NITI Aayog noted the high upfront costs to be a significant barrier to faster EV adoption. The body proposed many financial models in the report. One such idea is to separate the battery—which constitutes nearly 40 per cent of an EV cost—from the vehicle itself.
Customers would buy the vehicle and lease the battery, paying a monthly or per-kilometre fee—drastically cutting down the initial purchase price. Another way is to shift subsidies from rewarding the purchase of EVs to rewarding their use, for example, by paying for every kilometre an electric bus operates.
“The capital cost of vehicles has been subsidised instead of the number of kilometres run by such vehicles, and charging assets have been subsidised instead of the charging service provided by them. This kind of arrangement runs the risk of subsidies being extended to poorly utilised assets. It will be more appropriate to move towards a system where the financial support is extended to the service provided rather than to the assets procured,” NITI Aayog stated.
But none of these would work without strategic investment in infrastructure and technology, NITI Aayog noted in the report. Installing charging stations based on actual traffic data rather than just spreading them evenly and creating a dedicated agency to streamline their rollout were among the major suggestions by the thinktank.
Moreover, India needs to aggressively scale up research on new battery technologies using locally abundant materials like sodium, which would cut costs and reduce India’s dependence on imported minerals—especially with the current Chinese policing of rare earth magnets in play.
From the report, this much is clear—Niti Aayog wants the strategy to evolve from simply offering financial perks to intelligently directing the transition where it matters most.