Dear reader, as 2025, a year of global tumult and volatility, rolls by, Mint's reporters and columnists look around the corner on what is coming in 2026—to help you know what to expect and prepare for it. Tell us what you think at feedback@livemint.com.
The Indian government will focus on boosting the adoption of electric buses and trucks and charging infrastructure in 2026, which remains crucial for the nation’s goal of 30% electric mobility by 2030.
E-trucks and e-buses under the ₹10,900-crore PM E-Drive scheme would be the government’s priority in 2026, as incentives for electric two- and three-wheelers under the scheme are set to lapse in March 2026, a senior government official directly aware of the development said.
Overall adoption of electric vehicles (EVs) rose in India despite supply-chain disruptions in 2025, stemming from China’s grip in rare earths. Sales of the battery-powered vehicles topped 2 million units, compared to about 1.9 million in 2024.
Yet, the government has shifted its focus from personal mobility to mass transport systems, given that large diesel-powered vehicles emit more greenhouse gases and particulate matter, worsening air quality.
Just last week, PMI Electro Mobility, Eka Mobility, and Olectra Greentech,all new-age manufacturers, won nearly 80% of India's largest tender for electric buses that will be deployed in Bengaluru, Hyderabad, Delhi, Surat, and Ahmedabad.
“Diesel is notorious for emitting more air pollutants (particulate matter, sulphur oxides, nitrous oxides, etc) than petrol or even CNG (compressed natural gas),” said Shyamasis Das, fellow at the Centre for Social and Economic Progress (CSEP).
Sales of e-buses and e-trucks, despite last week's tender for 10,900 e-buses, still account for a fraction of the overall demand. In fiscal year 2025 (FY25), about 4,000 electric buses were sold in India, against roughly 63,000 diesel ones, according to Vahan. Sales of medium (N2) and heavy (N3) electric trucks incentivised under the PM E-Drive scheme have reached 496 as on 10 December 2025, as against more than 291,000 diesel-run N2 and N3 trucks.
Price is the biggest hurdle. Subsidies for commercial vehicles are important as the price of an electric truck or a battery-powered bus is about 2.5 times that of larger commercial vehicles powered by internal combustion engine (ICE).
“India’s ability to achieve 30% vehicle electrification by 2030 will hinge on one defining variable: whether the commercial segment scales fast enough to pull the rest of the ecosystem with it,” said Kunal Mundra, founder and chief executive of Astranova Mobility, a Gurugram-based EV financier.
Electric boost to heavy vehicles
The e-bus incentive allocation of ₹4,391 crore accounts for 40% of the outlay of the PM E-Drive scheme, aiming to roll out 14,028 new e-buses using these funds. These funds are provided to state transport undertakings (STUs), which will procure buses from manufacturers via tenders. For electric two- and three-wheelers, subsidies are reimbursed to the manufacturers.
Bus manufacturers are likely to expand capacity and focus on localization next year.
“In 2026, our focus is on accelerating what has already been working: increasing localisation of high-value components, collaborating closely with Indian suppliers for co-development, strengthening lead-time reliability, and expanding our domestic value-addition footprint. This will not only make PMI more resilient and cost-competitive, but also support the national vision of a self-reliant EV ecosystem,” said a spokesperson for PMI Electro Mobility Solutions Pvt. Ltd.
PMI sold 918 electric buses in 2025 till 10 December according to the government’s Vahan registry, second only to Olectra Greentech Ltd, which sold 928 buses in the same period.
However, the tendering process was not devoid of problems. Mint reported earlier that bidding for the country’s biggest e-bus tender for 10,900 buses was delayed by at least three months due to manufacturers not being satisfied with contract conditions and inadequate e-bus infrastructure in states.
Meanwhile, according to Das of CSEP, the PM E-Drive scheme is the first among the series of incentive plans since FY15 to focus on incentivising electric trucks.
He expects 2026 to see more pilots involving e-truck operations, but not large-scale deployment. The operational guidelines for e-truck incentives published by the heavy industries ministry in July this year created more policy clarity, he said. But the e-truck market is still nascent, he said, and needs more time to achieve scale.
Patchy incentive disbursal
PM E-Drive scheme followed the two phases or the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles or FAME. But the country’s record in disbursing incentives has been patchy, given compliance requirements and the focus to build local supply chains.
Apart from PM E-Drive, the government has two separate production-linked incentive (PLI) schemes – one for zero-emission vehicles and their spare parts (PLI-Auto), and the other for batteries (PLI-ACC).
While the government has disbursed a significant amount of money towards electric two- and three-wheelers under the PM E-Drive, it has yet to release incentives for electric trucks and buses. Similarly, no incentives have been disbursed under the ₹18,100-crore PLI-ACC scheme, indicating that India’s indigenous battery-making efforts are dragging.
PLI-Auto disbursals rose in FY26 to about ₹1,000 crore as of November 2025. In FY25, the first year of disbursal, the government doled out only ₹322 crore of the ₹25,938-crore scheme.
Localization is key
A common factor among all EV incentive schemes is the requirement for indigenising supply chains. Every scheme mandates that only those manufacturers which meet specific localization requirements. For instance, 50% domestic value addition under the PLI-Auto scheme, will receive sops.
And 2025 revealed why achieving supply-chain self-sufficiency is vital. China’s export control order on rare earth magnets in April 2025 drove the Indian automobile industry into a frenzy, as these magnets are used across all vehicle segments.
“Driven by the geo-political situations, we are seeing a worldwide disruption in the automotive supply-chain and India is getting affected due to the same as well,” said Shantanu Das, chief architect – automotive at Sasken Technologies Ltd. “Indian OEMs are gradually reducing dependencies on Chinese suppliers with more and more Indian suppliers. But managing cost is still a major concern.”
Two-wheelers lead the way
For electric two-wheelers, which have seen the highest EV adoption rate, the government has scaled down incentives under PM E-Drive to ₹5,000 per kilowatt-hour of battery capacity in the first year of the scheme (FY25), and half of that in the second year (FY26).
And not everyone is counting on incentives to boost sales of electric scooters. Bengaluru-based Ather Energy Ltd is not eligible for PLI-Auto sops, making it the only major e-scooter maker without any government incentives after March 2026.
“Our focus remains on growing profitably, even as subsidies for electric two-wheelers phase out in 2026,” said an Ather spokesperson. “Not having it (PLI-Auto incentives) places us at a short-term disadvantage, but we’ve been focused on building structural strength in our business operations that allows us to compete in the market.”
However, Ather said that it believes that startups and emerging EV players should have access to incentives such as PLI-Auto in the larger interest of driving EV adoption. The company, which started sales in 2018, has seen significant growth in its market share and expanded its distribution in 2025, the spokesperson said.
Much of that came even as the fortunes of Ola Electric Ltd took a tumble over service quality issues. However, legacy players such as Baja Auto Ltd and TVS Motor Ltd have also raced ahead in the EV market.
Ather has a 15% market share for 2025 sales as of 10 December, up from a 10% a year ago, according to Mint analysis of Vahan data. Ola Electric's market share tumbled from 40% at the end of 2024 to 15%. Bajaj Auto and TVS Motor have increased their share from 16% and 19% in 2024 to 21% and 23% in 2025, respectively.
Cheaper batteries, easier financing
Falling battery prices are also making EVs more affordable for consumers, said Mundra of Astranova Mobility. Batteries account for 40-50% of the cost of an EV.
“The cost structure of electric buses has been steadily improving over the past few years, driven by declining battery prices, greater localisation and increased production scale within India,” said the spokesperson of bus maker PMI. “For fleet operators focused on predictable duty cycles, the total cost of ownership of electric buses is already highly competitive with ICE buses in many urban applications,” the spokesperson said.
PMI also foresees price parity between ICE and EV models in the medium term, backed by maturing financing models.
Financing EVs in India is critical, as battery-powered vehicles are considerably more expensive than fossil fuel vehicles running on internal combustion engines. A December 2025 report by KPMG, however, said price parity between the total cost of buying and operating an electric two-wheeler and a petrol two-wheeler has almost been achieved in India.
India's commercial EV financing market may expand to nearly $20 billion by 2030, up from $2.37 billion in 2025, according to Mordor Intelligence, a market intelligence firm.
Large lenders need to partner with specialised smaller lenders to accelerate EV adoption in the country. "Specialists bring underwriting depth, asset management capability, and data-driven risk assessment — but balance-sheet scale and lower cost must come from mainstream lenders," said Mundra of Astranova Mobility.
Charging hurdles
The charging infrastructure is also expanding. India had about 29,000 public EV charging stations as of August this year. Mint earlier reported that while EV chargers are growing in number, reducing range anxiety, the dependence of manufacturers on Chinese components is still a concern.
Another key EV sector facilitator is battery swapping, which reduces charging times. This segment is nascent in India, with only two-wheelers and e-rickshaws currently using these facilities.
Narendra Murkumbi, managing director of Energy In Motion Ltd, told Mint that the company expects about 400-600 heavy-duty vehicles under long-term battery swapping contracts by March 2026. Energy In Motion set up a battery-swapping station for heavy commercial vehicles, the first of its kind, in Haryana in October 2025.
All government and industry efforts are aimed at boosting India's EV adoption, which lags behind that of other large economies, including China and European nations. And the government’s policy think tank, NITI Aayog, has suggested a stricter carrot-and-stick approach.
Apart from incentives to boost demand, in an August 2025 report, NITI Aayog recommended higher registration fees, tougher emission standards and increased input taxes on ICE vehicles to accelerate the transition to cleaner mobility.