Within a tight timeframe of 2026-2030, both the automobile industry and the battery manufacturing industry — that have qualified for production linked incentives (PLI) — are expected to make huge investments to localise manufacturing of electric vehicles (EVs) and components and ensure the market uptake of the new production to avail of the incentives.Yet, the regulatory enablers to create committed market demand to absorb this investment within the same time frame are uncertain.Similarly, under different demand incentive programmes, the consumers are also required to absorb an assigned number of EVs to stimulate a much larger market demand to move towards the intended ambition of at least 30 per cent fleet electrification by 2030 or even higher level for two-three wheelers. But the current annual market penetration is still hovering at only 6.5 per cent.The continuous policy flip flop on the expected regulatory target for EV market penetration is making the investment climate as well as the trajectory of zero tailpipe emissions transition, uncertain.Risking localisationEven when the official policy is so deeply interested in pushing its industry to localise the value chain and use demand incentives to create a critical mass of market demand, the policy steps on setting firm targets for time-bound upscaling of the EV transition, is weak and hesitant. There is no firm signal.Take for instance, the PLI schemes for local manufacturing of 50 GW of advanced chemistry cell and battery storage with support of Rs 25,938 crore by 2030. The beneficiary firms under this scheme are required to achieve a domestic value addition of up to 60 per cent within five years and make mandatory investment of Rs 225 crore /GWh for committed manufacturing capacity within two years and sell between 2025 and 2029 to access the PLI incentives within this period.So far, three beneficiary firms have been allocated a total capacity of 30 GWh. The information from the Press Information Bureau (PIB) statement of December 2024 shows only a capacity of 1 GWh is pilot-run by Ola Cell Technologies Private Limited. Where is the policy to create a market for 50 GW within that time frame?If industry has to sell at least 30 GW of batteries by 2030, the current fleet of EVs are absorbing just about 4 GWh of battery (as of 2023) — according to the S&P Global. According to the estimates of the International Council on Clean Transportation, the FAME incentive for 1 million electric two-wheelers can create demand for only about 2.3 GWh of battery cells. The larger demand for GWh scale of battery development will come from four wheelers as their battery capacity is about 10 to 20 times larger than the electric two-wheelers. Only scale can make the PLI scheme more viable by 2030. But what will change dramatically in the next five years without strong policy enablers and levers? Similarly, in the case of the PLI Scheme for Automobile and Auto Components scheme that has been extended by one year to 2027-28, the incentive will be provided for determined sales for a total of five consecutive financial years, starting from the financial year 2023-24 to 2027-28.Yet again, the PIB information shows that of the Rs 25,938 crore allocated, the actual disbursement of the aggregate incentive is only about Rs 322 crore (1.2 per cent) for FY 2023-24 — the first performance year of the scheme, that has been disbursed only in FY 2024-25.It’s too little and too late. While industry needs to be pushed to ramp up its assembly line quickly, firm policy signals are also needed on the expected scale of the market to be supported by regulatory targets. Already, the massive committed investments for incentive support (adding up the PLIs and all the incentive programmes), adds up to Rs 74,023.33 crore until 2030. The PLI schemes have further attracted more proposals of additional investment from the industry reflecting the market interest. But this has to materialise.There is a significant lesson in the first generation compressed natural gas programme in Delhi when its market was created with a firm regulatory mandate when the conventional and incremental technologies of petrol and diesel dominated.Moreover, the government’s own investments in supply chain of critical mineral supply for a self-reliant ecosystem also requires certainty in the EV industry roadmap. Strengthen policy leversThe official support for investment and demand stimuli needs policy enablers to accelerate the market uptake. Need state level drivers: It is encouraging how some state governments are coming forward to accelerate the EV transition.The most significant is the lead taken by the Maharashtra government to set the overall as well as vehicle segment-wise electrification targets in its newly released ‘Maharashtra Electric Vehicle Policy 2025’ this month. While aiming for 30 per cent electrification of all new vehicles by 2030, it has apportioned further targets to vehicle segments — 40 per cent of all new 2/3 wheelers, 30 per cent of new cars, 25 per cent of the of four-wheeler goods carriers, 40 per cent of buses, among others, by 2030. The policy also provides for state-level incentives for a fixed number of vehicles in each category. The passenger vehicles will also be exempted from toll tax. This policy has not been diluted by including incremental, alternative fuel-powered internal combustion engine (ICE) technologies and hybrids.Similarly, the new draft EV policy 2.0 of the Delhi government under discussion has aimed for an ambitious 95 per cent fleet electrification based on battery operated fully EVs in the time frame of 2027-30.Further, the Supreme Court has asked all government owned, public institution and public undertaking-owned vehicles in Delhi to be EVs. This provides direction to the EV policy 2.0 of the Delhi government.From this perspective, it will be beneficial if the recent advisory from the Commission for Air Quality Management — that has put both EVs and the alternative fuel-powered ICEs including CNG, ethanol and hybrid modes in the same bracket as the EVs — to further refine and develop a more differentiated policy approach to support rapid electrification for clean air and to support the Delhi government’s ambition. This is much needed in this polluted region, as a 2025 study from the National Institute of Advanced Studies has shown that if Delhi achieves full EV adoption, the highest reduction in ambient PM2.5 concentration will be possible with a 26 per cent reduction in mortality, related healthcare costs, 13 per cent in morbidity costs, and 27 per cent in per capita healthcare costs.Need central drivers: At the same time, nationally, more stringent fuel economy norms and zero emissions vehicle (ZEV) mandates are needed to build strong obligation for the industry to quicken the pace of electrification across segments.While efforts are underway to develop these norms for two wheelers and heavy duty segments, the car norms have been revised. But the draft corporate average fuel consumption standards (CAFÉ) for cars that was put up for consultation way back in April, is not yet out.The proposed CAFÉ III and IV norms are proposed to be 91.7gCO2/km for the period 2027-2032 and 70gCO2/km during 2032-37. This needs to be firmed up immediately even though there is a scope of further tightening of these norms. As a reference, by 2030, the European Union (EU) would begin to enforce the standard 49gCO2/km that will require massive electrification.India’s draft norms need to achieve the desirable increase in the actual and absolute EV numbers. The system of giving extra points or super credits to different technology approaches to meet the norms need to create stronger opportunities for EVs and not the incremental technologies including alternative fuels or hybridisation that are well-established technologies for improving fuel efficiency of the ICE vehicles. These super credits need to taper off.Placing regulatory obligations through ZEV mandate can be a stronger driver of change. Create policy stakes in new industrial transitionDespite the challenges, the reality is that even with the current policy signals and the incentive programmes, industrial investments in EV manufacturing have begun to expand and the product portfolio is diversifying.There is, therefore, no room for policy uncertainty and turnaround anymore.This change is evident in the official information on the domestic value addition certification (DVA) from the testing agencies. As per the PIB statement of March 27, 2025, six applicants under the original equipment manufacturing (OEM) category have received DVA certification for 66 variants, while seven applicants under the Component Champion category have received DVA certification for 22 variants.According to the available information, the first movers are Mahindra & Mahindra, Tata Motors, and Ola Electric. Mahindra & Mahindra is the first company to meet the DVA criteria in the three-wheeler category, while Tata Motors is the first company to meet the DVA criteria for both four-wheeler and bus categories. Ola Electric is the first two-wheeler company to meet the DVA criteria. Individually these companies have achieved noticeable EV share in their total annual production.The growing industry interest in manufacturing is also evident in the fact that a total of 115 companies have filed 120 applications under the PLI scheme for automobiles and auto components. Of these, 85 applicants have been approved. This also reflects the optimism in the market.Frontrunners, including Tata Motors, Mahindra and Mahindra and MG Motors dominate EV car sales. A Centre for Science and Environment analysis of the VAHAN database for the year 2023-24 shows rapid diversification of car models and variants from 15 in 2021 to 30 in 2024.There is higher diversity in vehicle models and improved range for the same price range, reduced battery prices and improved battery energy densities. Upcoming models are bridging the price diversity gap, and integrating advanced features.Similarly, e-two-wheeler models have increased from 195 models in 2021, to over 350 models today. The e-two-wheeler segment that was primarily start-up led, has now seen entry and growing market share of the traditional OEMs including Bajaj Auto Ltd and TVS. Considerably more dormant demand can be unlocked in all segments with reliable charging infrastructure. Future is electricClearly, there is no scope of turning back to stop India from developing an electric vehicle programme as a self-reliant industrial policy to meet the needs of climate and clean air action, industrial development, and clean energy transition in the automotive sector. Sooner the targets are set, the better.