👉 Download Article India’s automotive industry is at a turning point, with the electrification wave reshaping not just vehicles but entire ecosystems. While petrol and diesel powertrains continue to dominate, 2024 marked a critical shift in market dynamics, where electric vehicles (EVs) achieved a 7% share of the 26.2 million domestic vehicle sales. This reflects a growing consensus across OEMs, governments, and consumers that zero-emission mobility is no longer a distant goal but a rapidly emerging reality. During 2018, India’s auto market hovered around 25 million units, but declined due to the impact of COVID and widespread supply chain disruptions. During the recovery phase, India witnessed an accelerated shift toward alternative fuels, particularly electric vehicles, alongside CNG, hybrids, and other low-emission technologies. EV penetration, which remained below 1% until 2020, began to rise rapidly in response to favourable policies, infrastructure expansion, and growing OEM commitment. From 2% in 2021, EV sales increased steadily, reaching 5% in 2022, 6% in 2023, and an estimated 8% by May 2025. What makes India’s transition unique is its multi-fuel, multi-path approach. Alongside battery-electric vehicles, there is visible traction in compressed natural gas (CNG), hybrid, flex-fuel, and even hydrogen mobility. Electrification is advancing fastest in light vehicles, while alternate fuels remain dominant in segments like Heavy and long-haul freight. This heterogeneity reflects both the complexity and maturity of the Indian mobility landscape. Segment Overview: Electrification Across the Vehicle Spectrum Electric vehicles have maintained strong growth momentum in recent years. Between January and May 2025 alone, EV sales reached 0.9 million units, representing an 8% share of the overall vehicle market. Segment-wise, two-wheelers and three-wheelers contributed the bulk of these sales, accounting for 58% and 35%, respectively. Recent policy developments and government announcements suggest a clear focus on boosting electrification in shared mobility and commercial vehicle segments through targeted incentives and infrastructure support. Going forward, these sectors are likely to receive increased attention and backing to accelerate adoption. The rise of EVs in India is led overwhelmingly by two-wheelers (2Ws), which accounted for over 1.2 million electric units in 2024, roughly 6% of total 2W sales. This growth is concentrated among a few players, with the top 10 OEMs commanding 94% of the e-2W market. Consumers and e-commerce users are increasingly attracted to these vehicles for their lower running costs and enhanced range, particularly in urban and semi-urban markets. Three-wheelers (3Ws) are experiencing the fastest pace of electrification growth, especially in the high-speed L5 category. In 2024, over 6.8 lakh L5 three-wheelers were sold, with electric variants making up 1.5 lakh of them. This 22% share is up from 13% the previous year, driven by last-mile delivery demand from e-commerce, pharma, and retail sectors. Notably, CNG models maintained a 50% share, while diesel models declined further. Most state and central policies are now designed to incentivize adoption in the 2W and 3Ws space through subsidies, manufacturing-linked incentives, and infrastructure support. Four-wheelers (4Ws) lag in EV penetration at 2.5%, due to price, limited models and highway charging infrastructure. The recent announcements from OEMs in this space with newer models of higher travel range, higher warranty and better financial models are going to boost this segment. Petrol powertrain remains dominant, followed by CNG and diesel. EV sales crossed 1 lakh units in 2024, with significant contributions from Tata, MG, Hyundai, and new premium entrants. Electric buses are seeing strong uptake under government procurement programs like the PM e-Bus Sewa. Around 4,000 e-buses were sold in 2024, primarily for intra-city operations. States like Delhi, Maharashtra, and Karnataka led registrations. Goods carriers, particularly light commercial vehicles (LCVs), are also embracing electrification. With sales doubling in 2024, OEMs are rolling out models tailored for urban logistics, supported by fleet network and fast charging. Regionally, EV adoption is highly uneven. States like Uttar Pradesh, Maharashtra, Karnataka, and Tamil Nadu dominate electric vehicle sales, accounting for over half of the national volumes. Uttar Pradesh leads in e-3W adoption, especially in L3 and L5 categories, while Maharashtra and Karnataka show strong performance in both e-2W and e-4W segments. Tamil Nadu has emerged as a manufacturing and export hub, supporting a diverse EV mix. Conversely, smaller northeastern states like Assam and Tripura show traction mainly in commercial EVs, while several northern hill states lean toward electrified goods and passenger carriers rather than personal EVs due to the high-torque nature of the vehicle better for hauling. Electrification is primarily concentrated in light commercial and private vehicles, and pilot projects for hydrogen-powered vehicles are gaining attention in the heavy-duty goods and passenger transport segment, traditionally dominated by diesel. Petrol vehicles remain prevalent in light motor vehicles (LMVs), especially cars and two-wheelers. Meanwhile, Alternate Fuel Vehicles (AFVs), including CNG, hybrids, bi-fuel, and other low-emission options, are increasingly adopted in LMVs and light goods vehicles, signalling a broader shift in the fuel mix This shift, however, is not uniform across states. Some regions are advancing directly to Zero Emission Vehicles (ZEV) adoption, driven by proactive EV policies, manufacturing ecosystems, and investment in infrastructure. Other States are progressing through a phased path, relying more on AFVs to bridge the gap. This multi-adoption approach from States reflects varied levels of market maturity, readiness, and local priorities. OEM strategies moved beyond individual EV models to integrated platforms, diversified fuel portfolios, and ecosystem partnerships. Tata Motors’ acti.ev platform and Mahindra’s INGLO architecture exemplify this trend, offering modular, scalable solutions with high-range batteries and digital connectivity. Maruti Suzuki and Hyundai are also preparing dedicated platforms targeting the mass-market and premium segments. OEMs are hedging their bets with parallel investments in flex-fuel, CNG, and hydrogen. Bajaj’s launch of the world’s first CNG motorcycle, TVS and Honda’s flex-fuel trials, and hydrogen pilots by Tata and Ashok Leyland highlight a diversified approach to decarbonization. These efforts are not just stopgaps but part of a broader strategy to reduce emissions while EV infrastructure scales. Battery localization is another cornerstone. Ola’s gigafactory with a current capacity of 1.4 GWh, Tata Group’s Agratas gigafactory, Amara Raja’s tie-up with Piaggio, JSW-MG Battery-as-a-Service (BaaS) model, and Mahindra’s BaaS collaboration with Vidyut signal growing vertical integration. With India aiming to become a global battery manufacturing hub, these investments are aligned with long-term supply chain resilience. The premium EV segment is also heating up. Global entrants like BYD, Tesla, and VinFast are targeting high-income urban consumers, while domestic players like Mahindra and Tata are expanding into aspirational EV categories. Across the board, OEMs are embedding advanced driver-assistance systems (ADAS), 5G connectivity, and OTA updates, making vehicles smarter and more connected. Government Initiatives and Policy Support India’s evolving EV market is supported by Government policies with a balanced emphasis on both demand and supply-side interventions. On the demand front, the government has implemented targeted subsidy programs to reduce upfront costs and encourage adoption particularly in utility-focused segments. The FAME-II scheme played a foundational role in supporting electric vehicles adoption since 2019. More recently, the PM e-Drive scheme, launched in October 2024 with an allocation of ₹10,900 crore, aims to expand adoption further. It focuses on electric two-wheelers, e-three-wheelers for last-mile cargo and passenger transport, and the electrification of trucks and buses used in inter- and intra-city operations. Additionally, the scheme allocates funding to upgrade vehicle testing infrastructure, enabling readiness for emerging technologies such as Advanced Driver Assistance Systems (ADAS) and CASE (Connected, Autonomous, Shared, and Electric) applications. On the supply side, the government is backing domestic manufacturing through the PLI-Auto scheme, which supports the production of Advanced Automotive Technology (AAT) components, and the PLI-ACC (Advanced Chemistry Cell) program, which promotes large-scale battery cell manufacturing to localize energy storage systems. Further, the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), introduced in 2024, incentivizes global OEMs to establish manufacturing bases with reduced import duties, subject to investment and local value addition commitments. Together, these initiatives are laying the groundwork for a self-reliant, innovation-driven EV manufacturing ecosystem. The Road Ahead: Uneven but Unstoppable These policy and manufacturing advances have helped build critical momentum, especially in the two-wheeler and three-wheeler segments, which are now setting the pace for broader electrification across passenger cars, buses, and commercial fleets. With a strong pipeline of upcoming EV models, rising levels of battery localization, and a more mature regulatory environment, the foundation for a scalable and sustainable EV ecosystem is taking shape. The next leg of growth will depend on three key enablers: robust charging infrastructure, targeted state-level interventions, and cost parity with ICE vehicles. Pilot projects on Hydrogen mobility and Battery-as-a-Service models could also emerge as high-impact solutions in commercial and long-haul segments. India’s automotive decarbonisation story is not led by one choice, but by a diversified set of environmentally friendly options driven by OEM strategies tailored to segment dynamics and market maturity. Manufacturers adopted platform-based engineering, multi-fuel portfolios, and strategic localization to respond to both regulatory shifts and evolving consumer demand. India is driving toward a cleaner, multi-path future, where innovation, regulation, and infrastructure will determine the pace of progress.  

👉 Download Article    India’s Journey to 500 GW Non-Fossil Fuel Capacity: Storage as the Backbone In 2021, at the COP26 Summit, India announced its goal to achieve 500 GW of non-fossil fuel-based energy capacity by 2030, aligning with its Nationally Determined Contributions (NDCs) under the Paris Agreement. In its updated 2022 NDCs, India committed to reducing the emissions intensity of GDP by 45% from 2005 levels and ensuring 50% of total electricity capacity comes from non-fossil sources by 2030. The 500 GW target is central to achieving these climate objectives.   The Role of Energy Storage in a Renewable-Driven Grid A large share of the 500 GW will come from variable sources such as solar and wind, which are weather-dependent and intermittent. To manage this variability and maintain grid reliability, large-scale energy storage like battery energy storage systems (BESS) and pumped hydro is essential. Storage enables excess renewable energy to be stored and used when generation is low or demand is high, supporting a more stable and renewable-heavy grid. With renewables projected to reach 32% of the energy mix by 20301 (up from 13.8% in October 20242), storage becomes a vital buffer beyond traditional solutions like energy banking. Exponential Growth in Renewable Installations As of April 2025, India had 220.1 GW of non-fossil fuel electricity capacity.3 In 2024 alone, India added ~30 GW of capacity, an increase of 113% over 2023, indicating strong progress toward 2030 target. Of this, cumulative installed RE capacity (excluding large hydro) stood at 175 GW, a significant 390% rise from 35.85 GW in 2014. In April 2025 alone, ~3.3 GW of new RE capacity was commissioned with solar leading the mix, followed by wind, highlighting India’s rapid clean energy transition and the growing need for storage solutions. Fig.1 Installed Renewable Energy Capacity (MW) (Excluding Large Hydro Power) (Year-wise Achievements) Source: MNRE Energy Storage as a Critical Enabler Given the increasing share of renewable energy, the need for energy storage has become more critical than ever. Energy storage serves as a key enabler for renewable integration, ensuring power quality, frequency regulation, and grid stability. By absorbing excess electricity during peak generation hours and supplying it during periods of low generation or high demand, storage helps reduce curtailment, optimize generation costs, and maintain continuous power supply. This functionality is not just limited to environmental benefits; it also plays a crucial role in ensuring energy security and resource adequacy especially in the face of increasing electricity demand from electric vehicles, urbanization, and industrial growth. Government Initiatives and Policy Support Recognizing this need, the Government of India has taken several proactive steps to promote the energy storage sector. As outlined in the National Electricity Plan (NEP) 2023, India is projected to require 411.4 GWh of energy storage capacity by 2031–32. Of this, 236.22 GWh is expected to come from BESS, while 175.18 GWh is anticipated from pumped storage projects. To accelerate deployment, the government has introduced a Viability Gap Funding (VGF) scheme to support the development of 13.5 GWh of BESS by 2030–31. Out of this, 12.1 GWh of capacity has already been issued until April 2025, with financial assistance covering up to 30% of capital costs. In parallel, MNRE also focusing on inviting bids for 50 GW of renewable energy capacity each year from FY 2023-2024 till FY 2027–28.4 This initiative is designed to drive growth across the electricity ecosystem including generation, transmission, distribution, and storage infrastructure. To further accelerate the deployment of energy storage systems in India, the Government of India has introduced several supportive policy measures. For instance, in January 2025, the Central Electricity Authority (CEA) issued an advisory mandating all future solar projects to incorporate a minimum of 2-hour co-located ESS, equivalent to 10% of the project capacity, to enhance grid stability and support peak demand. This directive could lead to the addition of 14 GW/28 GWh of energy storage capacity by 2030, signalling strong policy support for co-located BESS deployment.In addition, several other national-level initiatives have been rolled out to support BESS growth, including: Waiver of ISTS charges for standalone BESS and renewable energy + storage projects commissioned before June 30, 2025. Model bidding guidelines issued by the Ministry of Power (MoP) in 2022 and updated in 2023, encouraging firm and dispatchable renewable energy (FDRE) tenders to include storage. CERC’s Ancillary Services Regulations (2022), which allow BESS to participate in frequency regulation and reserve capacity markets. State-level energy storage mandates requiring storage in RE procurement plans. Manufacturing incentives through the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) batteries. Resource adequacy planning, where states are now required to consider firm capacity from BESS and pumped storage projects (PSPs) in their long-term planning.Several states have also included energy storage in their RE Policies. Madhya Pradesh introduced its Pumped Hydro Storage Scheme 2025, which facilitates development through four different modes and offers incentives such as electricity duty waiver on pumping power and a 50% waiver on wheeling charges for five years. Complementing this, the Madhya Pradesh Renewable Energy Policy 2025 provides additional benefits like 100% exemption from electricity duty for 10 years and land-related concessions to storage project developers. Similarly, Telangana’s Clean & Green Energy Policy 2025 targets the deployment of 11,722 MW of ESS by FY35. The policy promotes both BESS and PSP by granting deemed non-agricultural status to project land, 100% stamp duty exemption, and electricity duty waivers. For battery manufacturing units, a capital subsidy of 20% (capped at INR 30 crore) is also available. Apart from Madhya Pradesh and Telangana, several other states are promoting energy storage through dedicated policies. For instance, under the Andhra Pradesh Integrated Clean Energy Policy 2024, the state aims to develop 25 GW of BESS and 22 GW of PSP capacity, positioning itself as the storage capital of the country. The Uttarakhand Solar Policy 2023 encourages solar-plus-storage solutions, offers capital subsidies for behind-the-meter (BTM) ESS, and provides exemptions from transmission and wheeling charges. The Rajasthan Renewable Energy Policy 2023 outlines specific targets for energy storage, including minimum storage requirements, Renewable Purchase Obligation (RPO) benefits, and a focus on R&D and manufacturing. The Odisha Renewable Energy Policy 2022 promotes renewable energy projects with integrated storage, offers incentives for BESS and PSP, and prioritizes hybrid projects with storage components. Under the Uttar Pradesh Solar Energy Policy 2022, the state emphasizes solar capacity addition with ESS and encourages R&D in energy storage technologies. The Karnataka Renewable Energy Policy 2022 focuses on ensuring round-the-clock (RTC) power using energy storage and aims to create a market for developing ESS capacity to support the expansion of renewable generation. The Maharashtra Unconventional Energy Generation Policy 2020–2025 targets the development of 50 MW of storage by 2025, encourages solar-plus-storage EV charging stations, and offers land and loan-related benefits. Lastly, the Tamil Nadu Solar Energy Policy 2019 highlights the use of energy storage systems to meet solar targets, with projects to be developed by either TANGEDCO or private players. To support these goals, each of these states has issued several energy storage tenders in the recent past. Such progressive policies are playing a critical role in accelerating the adoption and growth of energy storage systems across India. Despite Progress, India Remains Far from Achieving its BESS Deployment Target As of April 2025, only about 0.5 GWh of BESS capacity has been commissioned. However, momentum is building. In the first quarter of 2025 alone, more than 9 GWh of standalone BESS tenders were floated by central and state agencies such as NTPC, GUVNL, NVVN, and TGGENCO. Overall, more than 100 GWh of energy storage projects comprising both BESS and pumped storage are currently in the pipeline. In addition to the 0.5 GWh of operational capacity, around 7.5 GWh of BESS capacity is under construction and is expected to be operational by late 2026 or early 2027. A further 50 GWh of projects are in the tendering stage and may begin construction by the end of 2026 or early 2027. Fig.2 Commissioned and Under Construction Projects in India (Until May 2025) Source: IESA The Road Ahead: Scaling to Meet the 2031–32 Target In the best-case scenario, India could reach approximately 60 GWh of operational BESS capacity by 2027, roughly one-quarter of the 2031–32 target. To stay on track, India must add at least 30 GWh of BESS capacity every year from now until 2029. This requires not only sustained policy and financial support but also expansion of domestic manufacturing capabilities, stronger private sector participation, and innovative business models such as hybrid renewable-plus-storage power purchase agreements and storage-as-a-service models. Challenges in BESS Tenders and the Impact of Falling Tariffs in India Over the past few years, government authorities have issued several BESS tenders both as standalone projects and combined with solar power. However, recent trends show growing concerns from industry stakeholders about the direction in which these tenders are heading. Fig.3 Solar + BESS Tenders Snapshot (2018-2025) Source: IESA One of the main issues is the rapid and significant fall in discovered tariffs. In Solar + BESS tenders, the L1 tariff has dropped from around INR 6.99/kWh in 2018 to INR 3.09 in 2024 and 3.32/kWh in 2025, even as the battery capacities being tendered have increased significantly. Similarly, in standalone BESS tenders, the monthly tariff has dropped from INR 11.25 lakh/MW in 2022 to as low as INR 2.19–2.4 lakh/MW by early 2025. This represents a 75% drop in just three years, despite increased storage penetration and stricter resource availability requirements. These record-low tariffs may seem like a positive development atfirst glance, but many industry players warn that these numbers are not backed by sound cost calculations or operational plans. Fig.4 Standalone BESS Tenders Snapshot (2018-2025) Source: IESA While competitive bidding is essential for market development, the recent trend of record-low tariffs has raised concerns about project viability. In some cases, bids appear to lack alignment with the actual cost structures and operational realities of large-scale BESS projects. This misalignment has occasionally resulted in execution delays, contractual complications, or even re-tendering. These challenges underline the need for a more balanced approach that encourages both cost-effectiveness and project bankability. Recently, a few tenders faced issues post-award and tariff adoption, including the GUVNL 1000 MWh tender and the SECI ESS-1 tender with a capacity of 2000 MWh. Key reasons for these issues include non-fulfilment of project requirements and other compliance gaps. Beyond aggressive bidding, there are structural issues in the way tenders are being designed. The financial and technical eligibility criteria are not strict enough to filter out inexperienced or unprepared bidders. The earnest money deposits (EMD) and bank guarantee (BG) requirements are also relatively low compared to the size and complexity of these projects. This increases the risk of project failure after award. In addition, many tender documents often lack standardized technical parameters, making it harder to compare bids and enforce quality. There is also confusion around the GST structure and input credit, and no clear requirement for end-of-life battery disposal, both of which can affect project economics and long-term safety. Given the current situation, there is an urgent need to revise tender criteria. Key suggestions include: Limiting capacity allocation for first-time bidders, with future eligibility based on actual performance. Standardizing technical specifications such as cycle life, depth of discharge (DoD), degradation limits, and safety certifications. Supporting the indigenization of BESS components (excluding battery cells) to boost local manufacturing. Adopting a Quality and Cost-Based Selection (QCBS) method instead of purely L1-based selection, giving importance to quality and technical strength. Without these changes, the current bidding process may continue to attract participants who prioritize winning over actual execution. While low tariffs may look appealing in the short term, they are not sustainable and may harm the long-term growth of the energy storage sector. A well-designed, transparent, and performance-driven tender system is essential for India to meet its energy storage goals with reliable and bankable projects. A Glimpse of Pumped Storage Projects of India (PSP) Pumped Storage Projects (PSPs) are an essential component of India’s long-duration energy storage strategy, particularly to address the variability associated with renewable energy sources such as solar and wind. As of May 2025, approximately 122 GWh of PSP capacity has been announced by various central and state authorities. However, around 31.5 GWh of this capacity has been cancelled, while 39 GWh is currently under execution. An additional 35.2 GWh is in the tendering stage. In 2025, two new PSP tenders have been issued—one by Uttar Pradesh Power Corporation Limited (UPPCL) for 12 GWh and another by Adani Electricity Mumbai Limited (AEML) for 3.75 GWh. Fig.5 Pumped Storage Projects (PSPs) in India (Until May 2025) Source: IESA According to the National Electricity Plan (NEP) 2023, India is projected to require 175.18 GWh of pumped storage capacity by 2031-32. The cancellation of a significant portion of announced capacity highlights several challenges that are inhibiting the sector's progress. These include high upfront capital costs, limited financial incentives or government support, extended construction timelines, and uncertainty in early-stage revenue streams. To address these constraints and encourage the development of PSPs, it is recommended that VGF be extended to cover pumped storage projects. While VGF is currently available for BESS, its inclusion for PSPs could enhance project bankability by offsetting part of the capital expenditure, thereby improving financial viability and investor confidence.PSPs demand considerable initial investments for infrastructure development, including the construction of upper and lower reservoirs, installation of reversible turbines, and grid connectivity upgrades. These projects typically require 5 to 10 years for commissioning and may take decades to generate full economic returns. Such long development and payback periods pose challenges for attracting private investment, which generally favors quicker returns. Despite these barriers, PSPs offer substantial advantages. They provide a range of grid services such as load balancing, frequency regulation, peak demand management, and ancillary services and are well-suited for supporting renewable energy integration. Unlike BESS, PSPs do not rely on critical minerals, many of which are currently imported, makingthem a more resource-secure option for India. Furthermore, PSPs typically offer a longer operational lifespan and lower levelized cost over their lifecycle. Given these attributes, PSPs represent a technically and economically viable solution for meeting India’s long-duration energy storage requirements. Extending financial support mechanisms such as VGF, along with establishing clear revenue models, can improve project feasibility and facilitate greater private sector participation. This will be essential for ensuring the timely development of PSPs and achieving India's broader energy transition and grid reliability goals. Conclusion: Energy Storage as the Foundation of India’s Clean Energy Future Energy storage lies at the heart of India’s clean energy transformation. Without robust storage solutions, the country cannot realistically achieve its 500 GW non-fossil capacity target by 2030, nor its net-zero vision by 2070. Storage is no longer just a supporting technology it is the backbone of a modern, resilient, and low-carbon energy system. With strategic planning, technological innovation, and stakeholder collaboration, India has the potential to become a global leader in both renewable energy and energy storage. The journey has begun, but accelerated action will be essential to realize this vision. References India’s RE Power Rise: Renewable Share Reaches 13.85% in 2024 India’s renewables share in the Grid by 2030 MNRE- India’s Renewable Energy Capacity Achieves Historic Growth in FY 2024-25 The government decided to invite bids for 50 GW of renewable energy for the next 5 years India adds a record renewable energy capacity of about 30 GW in 2024 Installed Renewable Energy Capacity (MW) (Excluding Large Hydro Power)-MNRE