India's EV Policy Isn't Converting Buyers Yet | The Reason Why

India's mobility shift is playing out between petrol and diesel vehicles, hybrids and electric vehicles. The petrol and diesel ecosystem still dominates daily use. Hybrids and EVs are competing for new buyers. Within cleaner fuel options, the government has backed EVs, while consumers are leaning towards hybrids.   

What Consumers Demand

Electric car sales rose 76% in 2025. Strong hybrid sales rose 83%. On the surface, the growth appears comparable. Growth rates alone do not show the full picture.   

Hybrids delivered this growth with eight models on sale. EVs had more than 40 models in the market. The model base shows where buyers are responding.   

Surveys, including Deloitte's Global Automotive Consumer Study, show more Indian consumers prefer a hybrid for their next purchase over an EV. Global responses show a similar pattern. Hybrids reduce fuel use and emissions without relying on charging infrastructure. Consumers can use them without changing driving habits.   

Indian Government Preference For EVs

Policy has moved in a different direction. EV buyers received an income-tax deduction. The government offered purchase subsidies under the FAME scheme — Faster Adoption and Manufacturing of Electric Vehicles — and applied a 5% GST rate.

Supply-side support followed through production-linked incentives — government schemes that reward incremental output — for EVs, auto components and advanced chemistry cell batteries. Central and state governments also gave capital subsidies for EV manufacturing and charging infrastructure. The policy aim was to lower EV costs and expand supply.   

Charging infrastructure remains limited, which has constrained wider EV adoption. Hybrids have not received similar tax support. They face tax rates of up to 40% and are grouped with petrol vehicles under higher GST slabs.   

Union minister Nitin Gadkari has argued for GST cuts on hybrids and flex-fuel vehicles. These proposals have not been implemented. Policy signals remain divided between EV expansion and hybrid support.

ALSO READ: Profits Redirected: Tube Investments Channels Core Cash Into Loss-Making EV Arm

Carmakers In India Are Split And Cautious

Automakers are divided. Toyota, Maruti and Honda have supported tax cuts for hybrids. Tata Motors and Mahindra have raised concerns about the impact on EV adoption.   

Toyota Kirloskar Motor holds about 80% share in the hybrid segment. Maruti Suzuki India follows. Tata Motors leads the EV market with about 40% share. JSW MG Motor follows with under 30%.   

Maruti Suzuki has launched its first EV. Tata Motors is focusing on fast-charging solutions. BMW is increasing local production. VinFast and Tesla have entered the Indian market. Nissan has urged caution. Automakers are expanding EV offerings while maintaining hybrid options.

ALSO READ: Midwest: Meet the Granite King Powering India's EV, Solar, and Chip Pivot

Global Policies On EVs

Other countries have shifted policy. China is reducing broad EV subsidies. The United States has moved towards technology neutrality — policy that does not favour one technology over another. Europe has stepped back from a 2035 EV-only target. Japan includes hybrids and plug-in hybrids in its 2035 electrification goals. Mexico subsidises EVs and hybrids. Brazil continues to support flex-fuel vehicles. India continues to prioritise EVs.   

Final Take

The industry is assessing whether policy, infrastructure or consumer preference will shape demand. Consumers are favouring hybrids, while automakers keep both technologies in play to manage business risk.   

Global policymakers are widening their approach. India continues to favour one technology. If consumer demand shifts further towards hybrids, policy may adjust. Until policy and demand align, the transition will remain uneven.   

ALSO READ: The ePlane Company Partners With NVIDIA To Develop India's First Electric Air Taxi

Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.