Electric two-wheelers are gaining traction in India, but adoption is not uniform across states. An RBI study shows that where governments provide subsidies and charging support, people are switching to EVs much faster. In contrast, states with weaker incentives are lagging, highlighting how local policies and affordability directly shape India’s clean mobility journey.
India’s transition to electric mobility is at a crucial juncture. With transport contributing significantly to emissions and dependence on fossil fuels, the push for electric vehicles (EVs) has become both an environmental and economic priority. Within this shift, the two-wheeler segment is particularly important because of its scale and affordability. A recent Reserve Bank of India (RBI) analysis reveals that state-level financial incentives are playing a decisive role in shaping how quickly Indians adopt electric two-wheelers.
The RBI study compared adoption patterns across 23 states and found a stark difference between those offering direct financial subsidies and those relying only on tax and registration waivers. In September 2023, states that provided only waivers saw two-wheeler EV adoption drop by almost a quarter on a quarter-to-quarter basis. Meanwhile, states that supplemented waivers with direct subsidies recorded a smaller decline of around 17%. This indicates that subsidies remain critical in cushioning the impact of reduced support at the national level, particularly after adjustments in the FAME II scheme.
This finding is especially significant because the two-wheeler market in India is highly price-sensitive. For most households, affordability is the single biggest determinant of purchase decisions. Subsidies, by lowering the upfront cost, make EVs a more accessible choice for a larger pool of consumers.
The study also highlights regional disparities. Southern and Western states- many of which were early to adopt EV-friendly policies -regularly record higher-than-average adoption rates. By contrast, Northern and Eastern states lag behind, revealing the uneven pace of transition across the country. This reflects not only differences in financial incentives but also in local policy implementation, infrastructure readiness, and consumer awareness.
Alongside subsidies, charging infrastructure has emerged as a critical enabler of adoption. The presence of reliable charging facilities boosts consumer confidence in making the switch to electric mobility. States such as Karnataka, Goa, and Maharashtra in the west and southwest, along with Delhi and Haryana in the north, are leading in terms of charging infrastructure availability. Their success underlines the importance of complementing financial incentives with visible infrastructure that reassures buyers of practicality and convenience.
Some states have gone a step further by offering capital subsidies for setting up charging stations. Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, and Kerala provide between 25 and 60% of equipment costs as subsidy. Delhi has taken an even more ambitious step, providing full financial support for charging equipment. These measures ensure that infrastructure grows in tandem with demand, preventing bottlenecks that might otherwise slow adoption.
While subsidies and infrastructure are central, broader dynamics also shape the EV adoption. The Institute for Energy Economics and Financial Analysis (IEEFA) estimates that each rupee invested in EVs can generate up to 21 rupees of economic value, reflecting the sector’s ability to spur innovation, jobs, and ancillary industries. At the same time, consumer studies have found that while subsidies strongly influence purchase decisions, challenges like limited model availability, concerns about vehicle safety, and patchy charging networks remain obstacles to mass adoption.
National-level efforts, especially through the FAME II scheme, have also been instrumental. Since its launch in 2019, FAME II has channeled significant funding into demand incentives and charging infrastructure. Yet adoption has not been uniform, with some states failing to build the ecosystem needed to sustain growth once subsidies are reduced. For example, in Andhra Pradesh, EV penetration over the past five years has been well below the national average, illustrating how uneven implementation can limit progress.
Despite these challenges, the momentum is undeniable. India’s EV sales nearly doubled in 2023 and are projected to rise by two-thirds in 2024, driven largely by the two-wheeler segment. However, looming policy decisions, such as a possible increase in GST on premium EVs, could disrupt this trajectory if not carefully managed.
The RBI study reinforces a crucial lesson: state-level policies are as important as national schemes in shaping EV adoption. Where states combine subsidies with strong infrastructure support, adoption rates are resilient even in the face of reduced central incentives. Conversely, in regions where state-level support is weaker, progress is slower and more vulnerable to policy changes.
India’s two-wheeler EV transition is a socio-economic transformation. Success depends on aligning affordability, infrastructure, and consumer awareness. State governments are proving to be powerful catalysts, with subsidies and infrastructure support directly influencing adoption rates. Going forward, a coordinated approach between the centre and the states will be essential to ensure that EV adoption is broad-based, inclusive, and sustainable.
By combining national ambition with state-level execution, India can turn its two-wheeler EV revolution into a model for other emerging markets, accelerating its journey toward cleaner mobility and a greener future.
1. Why are electric two-wheelers more popular in some states than others?
State-level incentives—like subsidies, tax waivers, and support for charging infrastructure—play a major role in driving faster EV adoption.
2. What is the current market share and growth outlook for electric two-wheelers in India?
As of FY2025, two-wheelers made up close to 60% of India’s total EV market, with penetration rising from 6–7% to potentially 30–40% by 2030.
3. How much do electric two-wheelers cost compared to petrol bikes, and what are the running cost savings?
Although the purchase price is relatively higher, EVs offer major cost savings—electric models can cost as little as ₹0.50/km versus ₹2–5 per km for petrol scooters.
4. What are the main challenges hindering mass adoption of electric two-wheelers?
Key barriers include the high upfront cost, limited charging infrastructure in many regions, consumer skepticism regarding battery life, and uneven policy support.
5. Which states are leading in two-wheeler EV adoption and what incentives are they offering?
States like Maharashtra, Karnataka, Uttar Pradesh, Tamil Nadu, and Delhi lead in EV sales. They offer incentives ranging from battery-capacity-based subsidies (₹5,000–₹15,000/kWh), to 100% road tax and registration waivers.
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