What Happened
- Union Minister for Heavy Industries H.D. Kumaraswamy stated that India's aim is to move the electric vehicle (EV) sector to a global leadership position, citing a compound annual growth rate (CAGR) exceeding 60% in FY2024–25.
- Total EV registrations in India reached approximately 1.97 million units in FY25 (up from 1.68 million in FY24) — a year-on-year increase of approximately 16.9%.
- The government's flagship EV initiatives — FAME II, PM E-DRIVE (2024–2026), PLI for automobiles, and PLI for Advanced Chemistry Cell (ACC) batteries — are positioned as the policy foundation for this growth.
- The transition from FAME II (which provided broad consumer subsidies) to PM E-DRIVE (which focuses on mass mobility and charging infrastructure) marks a strategic shift in how the government is channelling EV support.
- India is also targeting a significant share of global EV manufacturing, leveraging the PLI scheme to attract domestic and foreign investment in battery and component production.
- The minister's statement comes amid global EV competition intensifying, with China dominating EV production and Western manufacturers scaling up, making India's "leadership" ambition a strategic-economic goal as much as an environmental one.
Static Topic Bridges
FAME Scheme: Evolution of India's EV Incentive Policy
The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme is the central pillar of India's EV demand-side policy. It has undergone significant evolution across its two completed phases, with PM E-DRIVE now continuing the mission with a revised focus.
- FAME I (2015–2019): Phase 1 with a budget of ₹895 crore; focused on hybrid and electric vehicles across two-wheelers, three-wheelers, four-wheelers, and buses; aimed to create early demand and build awareness
- FAME II (2019–2024): Budget of ₹10,000 crore (later revised); focused on public transport (electric buses), three-wheelers, and two-wheelers (not private four-wheelers); demand incentives linked to localisation requirements (minimum 50% domestic content)
- PM E-DRIVE (2024–2026): Budget of ₹10,900 crore; successor to FAME II; shifts focus to mass mobility (electric buses, two and three-wheelers for last-mile connectivity) and charging infrastructure deployment; 22,100 charging stations planned
- FAME subsidies are available only to vehicles meeting minimum domestic value addition criteria — this localisation conditionality drives the PLI scheme's strategic importance
Connection to this news: The minister's citation of 60%+ CAGR is the cumulative outcome of FAME I and FAME II demand stimulation. The transition to PM E-DRIVE signals the government's view that the EV market has matured sufficiently to reduce broad consumer subsidies and instead focus public funds on infrastructure and commercial transport.
PLI Scheme for EVs and Advanced Chemistry Cell Batteries
The Production Linked Incentive (PLI) scheme extends demand-side incentives with supply-side manufacturing incentives, targeting India's integration into global EV value chains and reduction of import dependence (particularly in batteries and key components).
- PLI for Automobiles and Auto Components (2021): Budget of ₹25,938 crore over 5 years; incentivises domestic production of Advanced Automotive Technologies including EVs, hydrogen fuel cell vehicles, and EV components
- PLI for Advanced Chemistry Cell (ACC) Battery Storage (2021): Budget of ₹18,100 crore; targets 50 GWh of ACC battery manufacturing capacity; as of February 2025, 40 GWh has been awarded to selected manufacturers
- India currently imports approximately 70–80% of its lithium-ion cells, primarily from China — PLI for ACC batteries is designed to create domestic cell manufacturing to reduce this dependency
- PLI incentives are structured as a percentage of incremental sales — manufacturers receive payouts only if they achieve production thresholds, aligning incentives with actual output
Connection to this news: India's EV leadership ambition cannot be realised without battery manufacturing self-sufficiency. The PLI for ACC batteries is the supply-side complement to FAME's demand-side incentives — together they constitute India's industrial policy for the EV transition.
CAFE Norms and BEE Star Ratings: Regulatory Push for Clean Mobility
Alongside demand incentives and manufacturing PLIs, India uses regulatory standards to push the auto industry toward cleaner vehicles.
- CAFE (Corporate Average Fuel Economy) Norms: India adopted CAFE norms (similar to US CAFE and EU fleet emission standards) to mandate overall fleet fuel efficiency improvements. Phase II CAFE norms require a fleet average of 113 g CO₂/km by 2022 and 99 g CO₂/km by 2027, incentivising manufacturers to include EVs and hybrids to offset higher-emitting vehicles
- BEE Star Ratings: The Bureau of Energy Efficiency (BEE) assigns energy efficiency star ratings to electric two-wheelers and three-wheelers, helping consumers identify more energy-efficient EV models and incentivising manufacturers to improve efficiency
- Vehicle Scrappage Policy (2021): Mandates retirement of old, polluting vehicles (20-year threshold for private, 15 years for commercial) — expected to boost replacement demand for EVs
Connection to this news: CAFE norms create a compliance imperative for automakers to sell EVs — manufacturers meeting EV sales targets generate regulatory credits that offset their higher-emission vehicles. This regulatory architecture works in tandem with FAME subsidies to create both demand pull and supply push for EVs.
India's EV Transition: Environmental and Strategic Dimensions
India's EV push is simultaneously an environmental, energy security, and industrial policy initiative. The transport sector accounts for approximately 14% of India's total greenhouse gas emissions, and over 80% of India's oil is imported — making EVs a strategic hedge against fossil fuel dependence.
- India's Nationally Determined Contributions (NDCs) under the Paris Agreement target 50% cumulative electric power installed capacity from non-fossil fuel sources by 2030 and net zero by 2070
- Transitioning road transport to EVs reduces oil import dependence (India's oil import bill was approximately $130 billion in FY24) and improves urban air quality
- China currently dominates global EV production (approximately 60% of global EV output) and battery manufacturing; India's PLI and FAME policies are partly designed to prevent strategic dependence on Chinese EV supply chains
- The global EV market is projected to reach 50% of new car sales by 2030 (IEA estimate); India's 60% CAGR positions it as a fast-growing market, though absolute volumes remain well below China and Europe
Connection to this news: Kumaraswamy's "leadership" framing is as much about industrial sovereignty and export ambitions as it is about domestic adoption. India aims to become a major EV exporter — particularly to Global South markets — leveraging its cost advantages, engineering talent, and PLI-induced manufacturing scale.
Key Facts & Data
- EV CAGR in India: Over 60% in FY25; 63% CAGR over 6 years
- FY25 EV registrations: ~1.97 million units (up from 1.68 million in FY24)
- FAME I (2015–2019): Budget ₹895 crore
- FAME II (2019–2024): Budget ₹10,000 crore; focus on public transport and two/three-wheelers
- PM E-DRIVE (2024–2026): Budget ₹10,900 crore; 22,100 charging stations planned
- PLI for Automobiles: ₹25,938 crore budget; Advanced Automotive Technologies
- PLI for ACC Battery Storage: ₹18,100 crore; 50 GWh target; 40 GWh awarded (as of Feb 2025)
- CAFE Phase II: 99 g CO₂/km fleet average target by 2027
- India's oil import bill: ~$130 billion (FY24) — strategic rationale for EV transition
- India net zero target: 2070 (Paris Agreement NDC commitment)