New Delhi [India], August 29 : States that provide financial assistance in the form of subsidies and grants are witnessing stronger adoption of two-wheeler electric vehicles (2W-EVs), according to a study report by the Reserve Bank of India.
The report highlighted that supportive policies at the state level have played a key role in shaping the adoption trajectory of EVs across different regions of the country.
It stated, "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 analysis of 23 states showed a clear difference in adoption trends. In the September 2023 quarter, six states that only offered tax and registration fee waivers, without any extra subsidy, recorded a sharp 24 per cent fall in adoption ratio on a quarter-on-quarter basis.
On the other hand, 17 states that provided top-up subsidies in addition to tax and registration waivers witnessed a smaller decline of 17 per cent.
This indicated that higher financial support helped cushion the impact of the subsidy reduction under the FAME II scheme.
The report further noted that Southern and Western states have been ahead of the rest of the country in 2W-EV adoption. These states, being early movers in formulating EV policies, have consistently shown better adoption ratios than the all-India average, while Northern and Eastern states have lagged.
Charging infrastructure is another critical factor influencing adoption. Out of the top five states with strong charging infrastructure, three, Karnataka, Goa, and Maharashtra, are from the southwest coast. Delhi and Haryana from North India also feature among the top five.
To improve the situation, several states, including Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, and Kerala, have offered capital subsidies ranging from 25 to 60 per cent on charging station equipment. Delhi has gone a step further, sanctioning a 100 per cent grant on the purchase of charging equipment.
The RBI said that adoption of 2W-EVs is critical for achieving India's decarbonisation goals. It underlined that state-level policy measures such as subsidies, tax waivers, and investment in charging infrastructure remain central to encouraging EV uptake in a price-sensitive market like India.
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