India’s EV Adoption Still in Early Stages, But Budget Measures Could Accelerate Growth
India’s electric vehicle (EV) adoption remains in its early stages, with the country’s penetration in the passenger vehicle segment at just 2.5%, according to a report by Moody’s. This figure is considerably lower than the government’s ambitious target of 30% by 2030. Despite this, the report notes that policy measures introduced in the Union Budget, such as exemptions on import duties for critical raw materials used in EV batteries, could foster a more robust domestic manufacturing ecosystem.
The inclusion of cobalt, lithium, lead, zinc, and ion battery scrap in the import duty exemption is expected to reduce production costs for EVs, making them more affordable for consumers. Another significant factor in promoting EV growth is the expansion of domestic lithium-ion battery production. By increasing local production, India could reduce reliance on imports and lower EV costs.
While these steps should boost EV adoption, the industry’s practice of import parity pricing may negatively impact Indian miners of zinc and lead, as they will have to lower prices to remain competitive. Moody’s suggests that a state mining index will enhance transparency in pricing, benefiting miners.
Additionally, the government’s focus on recovering critical minerals from mining tailings is an innovative step toward reducing waste and addressing environmental concerns. However, mining companies may face higher capital expenditures for tailings management.
India’s passenger vehicle industry is forecast to grow at 4% in fiscal 2025-26, supported by economic recovery and increased consumer spending. While EV adoption remains a challenge, the momentum in the automotive sector is expected to continue, driven by the government’s supportive budgetary measures and increasing demand for cleaner vehicles.
