Why India’s EV Policy Isn’t Fully Converting Buyers Yet
India’s shift toward cleaner transportation is currently a tug of war between traditional petrol and diesel engines, hybrids, and electric vehicles (EVs). While petrol and diesel vehicles still dominate the roads, hybrids and EVs are fighting for new customers. Interestingly, while the government is heavily backing EVs, many consumers seem to prefer hybrids.
What Consumers Actually Want
In 2025, electric car sales grew by 76%, while strong hybrid sales rose by 83%. While these numbers look similar, the underlying details tell a different story.
Hybrids achieved this growth with only eight models available in the country. In contrast, there were more than 40 EV models on the market. This suggests that buyers are responding more strongly to hybrid options.
Surveys, such as the Deloitte Global Automotive Consumer Study, show that more Indian buyers prefer a hybrid for their next car than an EV. This mirrors a global trend. Hybrids offer better fuel efficiency and lower emissions without the need for a charging station. For most people, they fit into existing driving habits more easily.
The Government’s Strong Push for EVs
Government policy has taken a very different path. To encourage EV adoption, the government offered income tax deductions and purchase subsidies through the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme. EVs also benefit from a low 5% GST rate.
The government also supports manufacturers through “production linked incentives” schemes that reward companies for increasing their output of EVs, parts, and advanced batteries. These policies aim to make EVs cheaper and more available.
However, the lack of charging stations across the country continues to limit EV growth. Meanwhile, hybrids do not receive the same tax breaks. They face tax rates as high as 40% and are taxed similarly to petrol cars. While some officials, like Union Minister Nitin Gadkari, have suggested cutting taxes for hybrids, no changes have been made yet.
A Divided Auto Industry
Automakers in India are split on which technology to prioritize:
- Hybrid Supporters: Toyota, Maruti, and Honda are pushing for tax cuts on hybrids.
- EV Supporters: Tata Motors and Mahindra worry that supporting hybrids will hurt the growth of the EV market.
Currently, Toyota Kirloskar Motor dominates the hybrid market with an 80% share. Tata Motors leads the EV market with about 40% share, followed by JSW MG Motor. As new players like Tesla and VinFast enter India, companies are trying to balance their portfolios by offering both technologies to manage their risks.
Global Trends in EV Policy
Around the world, policies are changing:
- China is reducing its broad subsidies for EVs.
- The U.S. is moving toward “technology neutrality,” meaning the government doesn’t pick one specific technology over another.
- Europe and Japan have adjusted their goals to include hybrids and plug in hybrids in their long-term plans.
- Mexico and Brazil continue to support a mix of EVs, hybrids, and flex fuel vehicles.
The Bottom Line
The future of the Indian car market depends on whether government policy, infrastructure, or consumer choice will lead the way. Currently, consumers prefer hybrids, but the government remains focused on EVs.
Until policy and consumer demand align, the transition to cleaner energy will likely remain uneven. Manufacturers will likely continue to offer both options to stay safe in an uncertain market.
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