States offering subsidies witness stronger e2W adoption: RBI report
August 29, 2025
RBI report highlights impact of subsidies on electric two-wheeler adoption, emphasizing importance of charging infrastructure for EV growth.
States offering subsidies have witnessed stronger adoption of electric two-wheelers, an indicator of financial incentives influencing consumer behaviour, according to Reserve Bank of India bulletin.
“Several studies have shown that monetary incentives such as rebates, tax credits, and reduced registration fees enhance EV adoption by lowering the initial purchase cost for consumers. Most State governments have been offering incentives such as subsidies along with tax and registration fee waivers on every new 2W-EV purchase. On the other hand, a few States did not offer any additional subsidies beyond tax and registration fee waivers,” said the report.
The report noted that the preferences of electric two-wheeler users in the country have been driven by a multiplicity of factors. in the aftermath of COVID-19, the high demand for personal mobility, encouraged bike rental companies to add more 2W-EVs to their fleet. An analysis of the 2W-EV adoption ratio in 23 states–six states that offered only tax and registration fee waivers without any additional subsidies, and 17 states that provided a top-up subsidy along with these waivers revealed differences in adoption trends.
“Southern and Western regions, early movers in formulating State-level EV policies, have consistently exhibited, while northern and eastern regions lag. Thus, the adoption trajectory across India is clearly non-uniform and nonsynchronous, which can be attributed to both local and a few common factors that played out differently across regions,” stated the report.
Charging infrastructure
Across the country, a major bottleneck in the adoption of an electric vehicle over an internal combustion engine-powered vehicle is the lack of adequate charging infrastructure.
“Charging infrastructure has been repeatedly identified as a critical enabler of EV adoption, finds that greater availability of public charging stations are associated with higher EV sales, emphasising the complementarity between charging availability and consumer demand. Supportive government policies have been central to the global growth of EVs, addressing barriers like high upfront costs and limited charging infrastructure. From tax incentives to subsidies, such measures have proven effective in fostering EV adoption by making them accessible and affordable to consumers,” added the RBI report.
Published on August 29, 2025
“Several studies have shown that monetary incentives such as rebates, tax credits, and reduced registration fees enhance EV adoption by lowering the initial purchase cost for consumers. Most State governments have been offering incentives such as subsidies along with tax and registration fee waivers on every new 2W-EV purchase. On the other hand, a few States did not offer any additional subsidies beyond tax and registration fee waivers,” said the report.
The report noted that the preferences of electric two-wheeler users in the country have been driven by a multiplicity of factors. in the aftermath of COVID-19, the high demand for personal mobility, encouraged bike rental companies to add more 2W-EVs to their fleet. An analysis of the 2W-EV adoption ratio in 23 states–six states that offered only tax and registration fee waivers without any additional subsidies, and 17 states that provided a top-up subsidy along with these waivers revealed differences in adoption trends.
“Southern and Western regions, early movers in formulating State-level EV policies, have consistently exhibited, while northern and eastern regions lag. Thus, the adoption trajectory across India is clearly non-uniform and nonsynchronous, which can be attributed to both local and a few common factors that played out differently across regions,” stated the report.
Charging infrastructure
Across the country, a major bottleneck in the adoption of an electric vehicle over an internal combustion engine-powered vehicle is the lack of adequate charging infrastructure.
“Charging infrastructure has been repeatedly identified as a critical enabler of EV adoption, finds that greater availability of public charging stations are associated with higher EV sales, emphasising the complementarity between charging availability and consumer demand. Supportive government policies have been central to the global growth of EVs, addressing barriers like high upfront costs and limited charging infrastructure. From tax incentives to subsidies, such measures have proven effective in fostering EV adoption by making them accessible and affordable to consumers,” added the RBI report.
Published on August 29, 2025