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Let us begin with a number that should embarrass every transport policy planner in India: 1 per cent. That is electricity’s share of the national on-road transport energy mix in 2025-26. Not 10 per cent. Not 5 per cent. One per cent — up from 0.05 per cent in 2019-20, representing six years of subsidies, schemes, and political speeches about India’s electric future. Petrol continues to command 50 per cent of the mix. Diesel holds 39 per cent. CNG has grown to 10 per cent. The electric revolution, measured in actual energy consumed on actual Indian roads, has barely registered.
This is not a counsel of despair. India has achieved real things in its electric vehicle (EV) transition. Battery EV penetration in new vehicle sales reached 6.8 per cent nationally in 2025-26. Three-wheeler passenger vehicles have reached 35 per cent BEV penetration. Delhi’s bus fleet is at 79 per cent electric. These are genuine milestones, achieved through sustained investment and policy commitment. But they also reveal the structural limit of what subsidy-led demand creation can accomplish when it operates without the anchor of binding regulatory mandates. The data tells us clearly: India has reached the ceiling of what subsidies alone can deliver. What comes next requires a fundamentally different policy instrument.
Before making the case for mandates, it is worth understanding precisely what the data shows about where India’s EV market has succeeded and why. The three-wheeler segment is the most instructive example. Nationally, BEV penetration for three-wheeler passengers reached 35 per cent in 2025-26, and for three-wheeler goods vehicles, 22 per cent. States like Assam recorded 92 per cent electrification in three-wheeler passenger vehicles, Jammu and Kashmir 98 per cent, and Uttar Pradesh 75 per cent.
What drove this? A combination of factors that, when viewed together, look very much like a de facto mandate: permit structures that concentrated new vehicles in electrified categories, operational economics that favoured EVs on short urban routes, and targeted subsidy support. The segment did not electrify because consumers spontaneously chose electric rickshaws. It electrified because regulatory and commercial conditions were aligned to make the electric option the default option for new vehicle acquisition.
But the same story, when viewed with a higher vantage point tells what happens when system failures subsume the subsidy gains. Delhi has been leading the EV transition game in the country both in terms of policy rigour and market adoption. One of the most impressive jumps was seen in three-wheeler passenger segment wherein the segment’s EV penetration increased from 18 per cent in 2022-23 to 34 per cent in 2024-25. But what followed this subsidy-based gains reveal the user experience. Under the Supreme Court order, Delhi had capped the number of permits issued for three-wheeler passenger (autos) vehicles at 100,000, four thousand of which were blocked for any emergency policy implementation so effectively decreasing the number to 96,000 permits. This measure was taken to tackle the congestion issue (because capping private vehicles would mean disrupting the political privilege of the affluent class that tacitly influence any and every policy making).
What this means is any auto-driver wanting to purchase a new auto will have to forgo his older permit. And despite the subsidy gains and rigorous EV campaigns, the new vehicle the driver is choosing is not an EV, but a CNG vehicle, which is evident through the 2025-26 registration numbers. Around 6,300 autos were registered in Delhi, all CNG; not a single e-auto.
There are hosts of infrastructure issues that need to be pondered into before declaring any band-aid measure that looks attractive for PR. Increasing the number of charging points is not going to do any good unless their accessibility to high miles segments like autos and cabs is codified in the upgrades. Assuming the auto and cab drivers do not belong to the affluent class with private parking and backend EV charging infrastructures, accessibility to home charging is yet another element to be resolved. Now what if until these infrastructure issues are resolved and the upfront costs of the new autos aren’t made attractive enough to make it a go-to choice? How can the upfront costs be made attractive — supply side and procurement mandates. When a Original Equipment Manufacturer (OEM) is mandated to ensure a certain percentage of their sales is BEVs, the economics will work for the buyer.
The bus segment explains this impact more starkly. Delhi’s 79 per cent electric bus penetration in new registrations did not emerge from consumer choice — there are no individual consumers choosing buses. It emerged from government procurement mandates, specifically PM-e-Bus Sewa and state procurement programs that required transport undertakings to acquire electric vehicles. Nationally, electric bus sales increased significantly between 2021-22 and 2025-26, driven entirely by committed government purchase orders.
I am not here to say subsidies are bad, but rather subsidies have a limited role at the onset of any technology adoption. If the system is not built to pick up the pace organically, we are basically wasting the funds spent on subsidies.
Contrast the three-wheeler and bus experience with the two-wheeler and passenger car segments, where the subsidy model has demonstrated its limits most clearly. National BEV penetration in two-wheelers stood at just 6.3 per cent in 2025-26.
The segment was initially pioneered by startups — Ather and Ola Electric — while traditional OEMs entered late and reluctantly. Critically, Honda, Yamaha, and Royal Enfield recorded no BEV sales in 2025-26. These are three of the most significant volume manufacturers in the two-wheeler segment. Their absence from the electric market is not accidental, it reflects the absence of any regulatory obligation to be present.
In Delhi, two-wheeler EV penetration stood at 7 per cent in 2025-26. Growth actually slowed during 2024-25 following the reduction in subsidy support under EMPS, before partially recovering. This is the clearest possible demonstration of the subsidy dependency trap: penetration rises when subsidies are available, stalls when they are reduced, and never generates the self-sustaining market momentum that regulatory mandates create.
The cab segment is equally revealing. India recorded a BEV penetration rate of just 1.6 per cent in cabs nationally in 2025-26. Maruti, the single largest player in cab registrations, has sold no BEVs in this segment. Delhi achieved 15 per cent cab electrification, but only because of the regulatory framework governing aggregator operations. The national figure shows what happens everywhere else: without binding requirements, the dominant players in a segment simply do not transition.
A mandatory ZEV sales percentage target for manufacturers — a gradually escalating requirement beginning in the 10 to 20 per cent range with clear compliance mechanisms — would accomplish what no subsidy scheme has been able to achieve: it would compel every OEM in the market, including the Honda-Yamahas and Marutis who have thus far been able to sit out the electric transition without commercial consequence, to commit a specified minimum share of their sales to zero-emission vehicles.
The mechanism is well understood from international experience. California's ZEV mandate, in place since 1990, demonstrated that binding manufacturer obligations, not consumer incentives, are what force sustained EV technology investment; even today, as the mandate faces federal legal challenge, the market transformation it created over three decades has proven irreversible. China is the more instructive contemporary example: its New Energy Vehicle mandate, requiring manufacturers to earn credits through EV sales or purchase them from competitors, pushed NEV penetration past 51 per cent of new car sales in 2025 — and rather than softening the policy at scale, China is tightening it, raising technical thresholds and quality standards to push the market toward higher-performing vehicles. The EU's experience offers a cautionary note directly relevant to India: the original 2035 ICE phaseout, which created significant battery investment momentum, was diluted in late 2025 under industry pressure to a 90 per cent emissions reduction target — precisely what happens when regulatory ambition is not anchored by binding, compliance-based manufacturer mandates from the outset.
In every case where electrification genuinely accelerated, the underlying mechanism was the same: the mandate removed the optional character of EV production. It is no longer a question of whether a manufacturer wishes to sell electric vehicles. It becomes a question of how.
For India, a ZEV mandate would have several cascading effects. It would put downward pressure on EV prices as manufacturers compete to meet targets. It would expand product diversity as OEMs develop electric variants across their lineup. It would free government capital currently tied up in demand subsidies — capital that could be redeployed toward charging infrastructure, battery recycling, and financing innovations for the informal sector buyers who constitute the primary market for two- and three-wheelers.
And crucially, it would create the investment certainty that the PLI-ACC battery manufacturing scheme requires to deliver its 50 GWh capacity target. As of late 2025, only 1.4 GWh of ACC manufacturing capacity was operational. A ZEV mandate is the demand signal that converts a battery factory from a financial liability into a financial necessity.
The scale of investment required makes the urgency of regulatory intervention unmistakable. According to estimates from the Institute of Energy Economics and Financial Analysis, approximately Rs 2.23 lakh crore was invested in the electric transport ecosystem between 2020 and 2025. The capital requirement to achieve 2030 targets is estimated at Rs 12.5 lakh crore. Current investments cover only 18 per cent of this requirement. The gap cannot be bridged by subsidy schemes operating within annual budget cycles. It requires the long-term market certainty that only binding regulatory mandates can provide.
EV battery demand in India was estimated at 17.7 GWh in 2025. Projected demand by 2032 is 256.3 GWh — requiring a compound annual growth rate of 35 per cent. This growth trajectory is only achievable if the vehicle market that consumes those batteries is being driven by regulatory requirements, not by the variable appetite of subsidy-dependent consumers.
The legal basis for a ZEV mandate exists. Section 31A of the Air (Prevention and Control of Pollution) Act, 1981, empowers pollution control boards to restrict or prohibit the use of polluting fuels. National Green Tribunal precedents on vehicle bans provide supplementary legal grounding. The Bureau of Energy Efficiency can develop accompanying credit mechanisms to provide manufacturers with operational flexibility while maintaining aggregate market targets. The legal scaffolding is there. What is missing is the political will to use it.
India’s oil import dependence has reached 88.7 per cent. Transport is the third largest energy consumer in the Indian economy. Without policy intervention, transport sector emissions are projected to peak only in the 2040s. A ZEV mandate is, therefore, not merely an environmental measure.
It is an energy security intervention of the highest order.