States that extend financial support through subsidies and grants are experiencing stronger uptake of two-wheeler electric vehicles (2W-EVs), according to a recent study by the Reserve Bank of India (RBI). The report emphasizes that state-level policy initiatives are significantly influencing EV adoption patterns across the country.
The RBI observed that many state governments have introduced incentives, including subsidies, as well as exemptions from taxes and registration fees for new 2W-EV buyers. However, some states have limited their support to just tax and registration waivers, offering no additional subsidies.
An analysis of 23 states revealed stark differences in adoption trends. In the September 2023 quarter, six states that did not provide top-up subsidies saw a steep 24% drop in their EV adoption ratio on a quarter-on-quarter basis. In contrast, the 17 states offering additional financial support experienced a smaller decline of 17%.
This trend suggests that higher levels of financial assistance helped mitigate the impact of the reduced subsidies available under the central government’s FAME II scheme.
The report also highlighted regional disparities. Southern and Western states have emerged as frontrunners in 2W-EV adoption, consistently outperforming the national average. These states were among the earliest to implement dedicated EV policies. In comparison, Northern and Eastern states have been slower to adopt.
Charging infrastructure remains a key driver in EV adoption. Among the top five states with well-developed charging networks, three—Karnataka, Goa, and Maharashtra—are located along the southwest coast. Delhi and Haryana from North India also made the list.
To boost infrastructure, several states, including Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, and Kerala, are offering capital subsidies ranging from 25% to 60% on charging station equipment. Delhi stands out by providing a full 100% grant for such purchases.
The RBI underscored that accelerating 2W-EV adoption is vital for India’s broader decarbonisation goals. It stressed that continued support through subsidies, tax benefits, and investment in charging infrastructure will be key to driving adoption in a cost-sensitive market like India.
