The gap between electric vehicles and diesel car sales in India is gradually narrowing, and the former is set to surpass the latter by June 2024. According to data from the Ministry of Transport and Highways, the number of registered electric cars climbed to an all-time high of 140,251 units in March 2023. By contrast, prior to the pandemic, their average number was 16,000 units per month. For FY2023 (financial year ending March 2023), registrations of electric vehicles grew by 157.7% despite the dissipating low base effect in the previous year.

While electric vehicles have significantly narrowed the gap with diesel vehicles in terms of adoption, India's electric vehicle market has a lot more room to grow as there is still a substantial gap with petrol-fuelled vehicles. The growth in electric vehicles will continue in the next two years. The projection made with the data and the forecasting tools available within the CEIC's platform shows that the electric vehicles registered in India will surpass that of the diesel-fueled cars not later than June 2024.

The increase in electric vehicle registrations has been aided by government-led incentives such as tax exemptions on loans for the same. The government has also rolled out many policies to build infrastructure and support the adoption of electric vehicles, such as Faster Adoption of Manufacturing of Electric Vehicles (FAME II), which is India’s key national policy, a production-linked incentive (PLI) scheme, battery swapping policy as well as a reduction in customs duties on raw materials.

The growth outlook and the government support for the EV sector have attracted a substantial amount of investment in India's automotive industry. In FY2022, the inflow of foreign direct investment in the sector reached an all-time high of USD 7bn.

Moreover, while the EV market in India is growing, the increase is not equally distributed across the country. The EV car registrations are mostly concentrated in the states of Uttar Pradesh, Maharashtra, and Karnataka. As of March 2023, the number of car registration in these states accounts for about 40% of the country's total, while their combined population is about 31% of India's population. With the increasing living standard and the less penetrated EV market in the rest of India's states, the long-term investment opportunities in the sector become even more promising.