States that provide direct financial incentives, such as subsidies and grants for electric vehicle (EV) purchases, are experiencing greater adoption of
electric two-wheelers (2W-EVs), according to a recent study published by the Reserve Bank of India (RBI). The report sheds light on how state-level policy differences have led to uneven EV adoption across the country. The RBI report noted that while most states have offered tax and registration fee waivers for electric two-wheeler purchases, only some have gone further to provide top-up subsidies. This divergence has resulted in varying levels of EV growth in the area. EV Adoption Amid Limited Support The analysis of 23 states showed that in the September 2023 quarter, six states that only offered basic tax and fee waivers saw a 24 per cent drop in their 2W-EV adoption ratio quarter-on-quarter. Meanwhile, 17 states that also provided additional financial subsidies experienced a smaller decline of 17 per cent, indicating that higher financial support helped mitigate the impact of reduced central subsidies under the FAME II scheme. “Most state governments have been offering incentives such as subsidies along with tax and registration fee waivers on every new 2W-EV purchase. On the other hand, a few states did not offer any additional subsidies beyond tax and registration fee waivers,” the report said. Southern And Western States Lead The Change The RBI observed that Southern and Western regions, particularly early adopters of EV policies, have maintained adoption ratios above the national average. In contrast, Northern and Eastern states are still catching up. The report attributes this difference to both policy readiness and availability of charging infrastructure, which remains a key barrier to EV adoption. Among the top five states with the most developed charging ecosystems are Karnataka, Goa, Maharashtra, Delhi and Haryana. These states have invested heavily in charging infrastructure, giving them a strong lead in the EV transition. Charging Support And Policy Push To further bridge the infrastructure gap, several states have introduced capital subsidies for setting up EV charging stations, including Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, and Kerala are offering subsidies ranging from 25 per cent to 60 per cent, states the report. Delhi stands out by providing a 100 per cent grant on the purchase of charging equipment. These measures are critical, especially in a price-sensitive market like India, where cost and convenience are top considerations for consumers, added the RBI report. EV Adoption Crucial For Decarbonisation Targets The RBI reiterated that accelerated 2W-EV adoption is vital for India's decarbonisation targets. The study underscores that state-level initiatives, including financial subsidies, tax reliefs, and investment in infrastructure, are central to driving sustainable growth in the electric mobility space.
