In India’s vast and complex automotive landscape, government policy has long served as both an accelerator and a brake. Recent discussions around GST reductions on small cars and relaxed fuel economy norms highlight a persistent tension: the balancing act between driving sales and fostering a sustainable future. While intended to make vehicles more accessible, such measures can inadvertently tilt the market towards short-term gains, creating a challenging environment for the electric vehicle ecosystem. This has prompted industry leaders to question whether current incentive structures are truly paving the way for innovation or merely creating a comfortable dependency.
This debate is framed by a stark reality. Globally, EV adoption has surpassed 16%, signaling a decisive shift in technology and consumer behavior. India, however, remains in the nascent stages at approximately 2.5% adoption. In this context, the very policies designed to close this gap are coming under scrutiny. As Sameer Jindal, Director – VAVE at MG Motor India, points out, “manufacturers often find themselves designing strategies primarily to secure eligibility under subsidies rather than to push the frontier of true innovation. The outcome is a paradox—incentives meant to encourage progress may inadvertently delay it.”
This sentiment underscores a concern that the focus on meeting subsidy criteria stifles groundbreaking technology. Jindal notes that proposals to open the market to leading global suppliers or incentivize advanced technologies like plug-in hybrids remain on the periphery. This risks impacting India’s ambitious goals, including 30% EV adoption by 2030 and its Net Zero target for 2070.
Building a Future Beyond Incentives
While policy adjustments are critical, some leaders argue the ultimate goal must be an industry that can stand on its own. Vikram Handa of Epsilon Carbon champions a vision for a globally competitive battery materials industry driven by private sector innovation, not perpetual government support.
“India can definitely build a globally competitive battery materials industry; however, it must be driven by technology, ability to scale, and sustainable practices,” Handa says. He views subsidies as a kick-starter but warns against long-term dependency, which he believes prevents the sector from developing “real strength.” For Handa, the path forward lies in robust R&D, efficient supply chains, and a relentless focus on quality.
He points to integrated manufacturing sites as the blueprint for this future. “Integrated sites provide good control as the whole value chain sits in one place,” he notes, explaining that this model leads to better resource use, lower emissions, and faster innovation. This approach, he argues, builds lasting competitiveness that can thrive globally, with or without subsidies.
Acknowledging the Initial Spark
However, the role of subsidies isn’t universally dismissed. In certain emerging sectors, they are seen as a vital tool for overcoming the initial affordability barrier. Anoop Srikantaswamy, CEO of electric tractor manufacturer Moonrider, offers a compelling perspective from the farm mechanization space.
“Subsidies play a vital role in accelerating farm mechanisation in India,” Srikantaswamy states. “They help small and marginal farmers cross the affordability barrier and speed up the shift from manual to mechanised farming.” He draws a parallel to the EV space, where subsidies create initial demand, build scale, and strengthen the supply chain.
Yet, even here, the endgame is self-sufficiency. “The real test of innovation comes after subsidies,” he concludes. “At Moonrider, our vision is to design electric tractors that farmers will continue to choose not because they are subsidised, but because they are reliable, affordable, and transformative.” This nuanced view captures the core of the debate: subsidies are a bridge, not a destination.
