India’s EV Ambition Faces ₹10 Lakh Cr Funding Gap, Says Report

India deployed about ₹2,23,119 crore ($25.6bn) in electric mobility between 2020 and 2025 across manufacturing capacity, government fiscal support and public charging infrastructure, according to the report titled ‘Capital flows in India’s electric transport sector’, published by the Institute for Energy Economics and Financial Analysis (IEEFA).

However, this figure represents only about 18% of the roughly ₹12,50,000 crore required to achieve national transport electrification targets by 2030. The funding gap of over ₹10,30,000 crore is projected to be mobilised by 2030.

IEEFA proposed an integrated EV financing platform that bundles partial credit guarantees, residual value protection, battery-as-a-service arrangements, and co-lending structures into a unified framework co-ordinated at the point of lending. Development finance institutions with existing guarantee infrastructure and banking relationships would anchor the platform—SIDBI for the MSME segment, including commercial two- and three-wheelers and small fleet operators, and IIFCL for larger commercial fleets, bus deployments, and institutional buyers.

“Manufacturers need predictable demand signals to scale capacity, but demand depends heavily on affordable credit,” report co-author and Sustainable Finance Specialist at the organisation, Saurabh Trivedi stated in the news release. “An integrated platform that shares risks appropriately across lenders, OEMs, and public institutions can reduce financing costs and unlock commercial-scale deployment,” the statement added.

Adoption Still Uneven

India targets EV sales comprising 30% of all private cars, 70% in commercial vehicles, 40% in buses and 80% in two- and three-wheelers by 2030. Achieving these goals requires substantial investment in electric vehicle (EV) manufacturing, charging infrastructure and supportive ecosystems.

According to Down To Earth, early adoption was facilitated by state-level incentives and government support programmes particularly for electric two- and three-wheelers, which reached scale earlier due to their strong commercial use cases and positive total cost of ownership. However, adoption is still uneven; even though E2Ws and E3Ws saw significant growth in absolute sales, adoption rates in most segments remained below 10% as of 2025. The market is dominated by E2Ws and E3Ws (passenger and cargo), followed by buses and electric cars (E4Ws), reflecting this divergence in the industry structure. Notably, E2W sales exceeded 1mn (10 lakh) for the first time in 2024, demonstrating the growing scope and market acceptability of the segment.

Financing the Transition

India's EV transition will necessitate creative financing models in order to reduce upfront costs and reduce lender risks, according to reports by the Rocky Mountain Institute and NITI Aayog.

Meanwhile, blended finance, credit guarantees and battery-leasing mechanisms are thought to be essential, especially for small fleet operators and commercial transportation sectors to speed up adoption.