Will Energy Crisis and Govt’s EV Push Fast-Track India’s Commercial EV Ambitions?

India is planning incentives exceeding $1bn to encourage adoption of electric buses and trucks to cut fossil-fuel use in the segment amid a deepening energy crisis.

According to reports, the programme would last for a decade and target India’s largely privately owned commercial vehicle fleet, with the biggest share likely earmarked for inter-city bus operators, reported Bloomberg, adding that meetings with the Prime Minister’s Office and industry stakeholders are expected this month to refine the plan.

The final details on budget allocation, vehicles eligible for incentives and subsidy structure are still under discussion and are subject to change.

Considering the impact of the West Asia crisis on supply disruptions to India, the country is reeling under the concerns about imported inflation and energy security.

Commenting on the impact of rising geopolitical tensions and crude oil disruptions on India’s transition towards electric mobility, Himani Jain, Fellow, Council on Energy, Environment and Water (CEEW) said, “Current geopolitics has triggered one of the biggest global energy supply shocks in history - EVs are now critical from India’s energy security standpoint, beyond climate change and local air pollution.” She underscored that the operational costs for Light Commercial Vehicles (LCVs) typically constitute 80% of life cycle costs. She noted that research by CEEW indicated that electric LCVs are already financially attractive, offering nearly 35% lower cost per km compared to similar Internal Combustion Engine (ICE) variants.

The plan, when executed, will have a three-pronged impact on India’s energy and economic challenges. It would help the country deal with the impact of the West Asia conflict, address its persistent air-pollution problem, and encourage India to emerge as a global manufacturing and technology hub.

According to the International Council on Clean Transportation, vehicular emissions can account for nearly 40% of fine particulate matter pollution annually. Transitioning conventional commercial transport to electric mobility would significantly help reduce the environmental toll of emissions coming out of commercial vehicles.

The Bloomberg report further revealed that the incentives being considered include interest subvention benefits worth as much as 1.5mn rupees ($17,500) per vehicle over its lifetime, with support tapering over time. The government is also considering a partial credit guarantee mechanism to encourage lenders to finance private companies’ purchase of electric commercial vehicles.

Speaking about the proposed incentives, Jain mentioned, “The proposed incentives for electric commercial vehicles are critical. However, beyond incentives, the policies must nudge towards mandates - following the cue from the recent Draft Delhi EV policy.” She highlighted that India is home to about 8-9mn LCVs - taxis, maxi cabs, autorickshaws, light goods vehicles. She added that, on average, every e-LCV could potentially save about 4 litres of oil equivalents daily.

India’s Rising Energy Concerns

A May 21 report published by CNBC-TV18, Former G20 Sherpa and ex-NITI Aayog CEO Amitabh Kant has supported an aggressive shift towards electric mobility, adding that India should stop registering fossil-fuel-powered two-wheelers and three-wheelers after 2027 as part of a broader push towards energy independence and clean mobility.

He also advocated that the country must directly move towards full electrification including buses, lorries, commercial vehicles and passenger vehicles, instead of getting locked into intermediate technologies such as hybrids by the end of the decade.

Government’s EV Policy Push

According to reports, the Indian Government is accelerating its EV push with an aggressive mix of production-linked incentives (PLI), massive consumer subsidies through the ₹10,900 crore PM E-DRIVE scheme and state-level mandates.

The goal is to rapidly establish domestic battery manufacturing and achieve 30% EV penetration across all segments by 2030.

Despite aggressive policy push and government subsidy support, India’s commercial EV transition continues to face structural and financial challenges that could slow large-scale adoption.

Commercial EV Adoption Challenges

While India is taking steps to achieve a nationwide transition through adoption of electric vehicles, there exist challenges on this path. According to a January 2025 report published by India Brand Equity Foundation, commercial electric vehicle adoption faces multiple challenges in India, including high upfront costs of electric buses and trucks, which remain a major barrier for fleet operators, especially for small businesses.

In addition, transition-anxiety-inducing elements such as limited charging infrastructure, particularly along highways and in rural areas, obstruct long-distance operations. Transition to EVs also comes with the risk of burning a hole in the pocket as battery replacement costs and dependence on imported critical minerals can escalate costs. Moreover, financing options for commercial EVs remain limited due to concerns over resale value and technology risks. Supply chain disruptions, lack of skilled maintenance workers, and inconsistent state-level policies further slow the transition to cleaner commercial transport.

Elaborating on the challenges that are slowing EV adoption in India, Jain said, “Electric vehicle costs are 1.2-1.3x higher than ICE variants. CEEW 2025 study finds that light commercial fleets face limited vehicle models, service-maintenance outlets, and charging infrastructure supply.” She stated that EV purchase subsidies, coupled with local restrictions and pricing measures on ICE vehicle operations, could fast-track EV adoption. She further noted that a charging infrastructure study by CEEW showed that an extensive network of low-cost L1 and L2 chargers could nudge a faster adoption of e-LCV and electric motorised two-wheelers.

Can India Meet Targets?

The International Council on Clean Transporation (ICCT’s) ‘Vision 2050: Update on the global zero-emission vehicle transition in 2025’ report stated that achieving India’s existing national and state-level electric vehicle (EV) targets could indeed reduce road transport carbon dioxide-equivalent (CO2e) emissions by 50% by 2050. This projection, highlighted in the International Council on Clean Transportation’s (ICCT) Vision 2050 assessment, underscores how aggressive adoption can reshape mobility.

Jain commented, “According to Petroleum Planning and Analysis Cell (PPAC, MoPNG), Medium and Heavy Duty Vehicle (MHDV) segment - Trucks and Buses consume about 1/3rd of India’s imported oil. The biggest oil import reductions and savings in valuable Forex can be possible with alternative fuel technologies in MHDV.” She pointed out that e-MHDVs remain 2-2.5 times more expensive than equivalent ICE variants. She noted that government schemes such as PM-eBus Sewa and PM e-Drive are currently focused mainly on bus electrification. She further stated that a 2025 CEEW study recommended prioritising e-truck adoption in the initial phase for fixed-route, factory-linked and port-based captive truck operations.