EVs or Biofuels: Decoding India’s Game-plan

Electric vehicles (EVs) have gained significant traction in recent years. This, along with biofuels, is at the centre of India’s energy transition pathway to help it realise its ambitions of net zero emissions by 2070. Also, to meet 50 per cent of its electricity requirements from renewables by 2030.

Biofuels can not only play an important role in providing a low-carbon solution in transport, including trucking, shipping and aviation, but also bring down India’s dependence on imports to meet its oil needs. Electric Vehicles (EVs), on the other hand, are the key technology for decarbonizing the transport sector in its clean energy transition journey.

According to Union Minister Mr. Nitin Gadkari, India intends to have EV sales penetration of 30 per cent for private cars, 70 per cent for commercial vehicles and 80 per cent for two and three-wheelers by 2030.

While India’s EV wave is the future with the Government of India pushing for its adoption to reduce fuel consumption and improve the environment, biofuels are changing the game now. Estimates suggest that India’s average ethanol blending rate with petroleum in 2023 will be 11.5 per cent and the aim is to achieve a 20 per cent blending ratio by 2025-26.

Replacing natural gas consumption with biogas and biomethane incrementally to 20 per cent by 2030 can help India cut liquefied natural gas (LNG) import bills by USD 29 billion between the fiscal year 2025 and 2030. And the inauguration of the Global Biofuel Alliance at the G20 Summit is expected to further propel these sustainable alternatives into the mainstream, contributing significantly to climate change mitigation.


The EV sales figure paints a clear picture of India’s accelerating shift towards sustainable mobility while underscoring the strength of the market.

The recent data from Ministry of Road Transport & Highways – India and National Informatics Centre, Govt of India Vahan Dashboard, reveals that the annual EV sales in India zoomed past 1.3 million units in fiscal 2023, which is a whopping 180 per cent increase from the previous year.  In the first seven months of 2023, India notched up impressive cumulative sales of 8,38,766 EV units. If market research firm Jato Dynamics is to be believed EV sales grew 112 per cent YoY to 50,284 units during April-September 2023.

Two-wheelers are going electric crazy fast and the segment has expanded three-fold to around 6,70,000 registrations in FY 2022-23. The country boasts 1.4 million registered electric two-wheelers, courtesy homegrown innovation, engineering and manufacturing, combined with strong government support on both the demand and supply sides. The sales rose from 54,508 units in July to 62,455 units in August. Similarly, over 2 per cent of all four-wheelers registered in India for August 2023 were all-electric, according to Annual India EV Report Card by JMK Research & Analytics.

The Economic Times (ET), quoting sources, reported that 23,37,761 EV units were sold till FY 23 with E2W holding the largest share with 48.76 per cent and E3W passenger vehicle just behind with 43.33 per cent. The sales of E3W Cargo and E-Cars were almost the same at 3.65 per cent and 3.85 per cent, respectively while E-bus accounted for just 0.17 per cent and others 0.24 per cent.

A number of Indian corporates, including Mercedes-Benz, Tata Steel, Dabur, Amazon, and Tech Mahindra, are adopting green transport for last-mile distribution and supply chain operations, and even for employees in order to reduce carbon footprint.

Is It the Future of Transportation?

The Economic Survey 2023 predicts that India’s domestic electric vehicle market will see a 49 per cent compound annual growth rate (CAGR) between 2022 and 2030, with 10 million annual sales by 2030. The EV-Ready India dashboard, which Union Minister for Power and New & Renewable Energy, Mr. R. K. Singh unveiled last month, has also projected a 45.5 per cent CAGR in EV sales between 2022 and 2030. It estimates over 16 million annual EV deployments in India by 2030, with Maharashtra and Delhi leading in charging infrastructure. A staggering 1,39,36,691 (13.9 million) electric two-wheelers are expected to hit India’s roads by 2030 compared to 6,90,550 (0.69 million) in 2022.

The dashboard also reports that India has already avoided an estimated 5.18 million tonnes of CO2 emissions in 2023.

According to a report by Bain & Company, the India’s EV market is expected to see 40–45 per cent EV adoption for two-wheel vehicles and 15–20 per cent for four-wheel passenger vehicles by 2030, with 12 million to 13 million new two-wheel EVs and one million new four-wheel passenger vehicles being sold in India annually by 2030. It is projected to become a USD 266 billion market by 2030.

This might help India save more than USD 14 billion in crude oil imports yearly.

The Govt Push

In order to encourage the adoption of electric vehicles in India, the government has created policies and programmes like the National Electric Mobility Mission Plan (NEMMP). It has also introduced measures such as concessional GST rate of 5 per cent on EVs; demand incentive through Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II) scheme; declaring EV charging a service; allowing a ubiquitous network of chargers; and tax exemption up to Rs 1.5 lakh on the loan amount for buying EVs.

To further provide impetus to green mobility, the Union Budget 2023 removed custom duty on capital goods/machinery to help boost the domestic production of lithium-ion batteries that power electric vehicles, which will also help to bring down the cost of EVs in the country. Besides, the Centre signed an MoU with Australia in 2022 to source critical minerals such as copper, lithium, nickel, and cobalt, which are essential to produce EVs.

The government is also considering introducing another production-linked incentive scheme for batteries, which will be in addition to the PLI scheme for manufacturing advanced chemistry cell (ACC) batteries that was approved in May 2021, to reduce the price of storage.

It is promoting the installation of EV charging stations, one of the primary impediments to the widespread adoption of EVs, by providing capital subsidies through the FAME India Programme Phase II and state-level measures.

India is home to over 700 EV start-ups and the exponential growth in sales have also led to a rise in investments in EV production. And the government is striving to achieve 100 per cent local production of EVs under the ‘Make in India’ initiative, riding on a constructive policy framework and production-linked incentives to reach 17 million units by 2030.

India is also planning a new policy to attract EV manufacturers and encourage greater investment in the sector. Discussions are on to introduce a scheme for subsidising electric four-wheeler makers based on the investments made by them for producing vehicles in the country, the ET reported.

Also, in the offing is a policy to support local manufacturing of electric cars and provide a level playing field for the industry. States like Assam, Telangana, Tamil Nadu, and Gujarat have also created attractive policies and programmes to incentivise EV manufacturing in their respective territories.

Biofuels – a crucial item in India’s Energy Basket

While the transition from petrol to EV is a significant step in the move to a net-zero future, resource scarcity, infrastructure limitations, range anxiety and the price being the higher side have restricted its market penetration and consumer acceptance. Thanks to its unique agrarian profile, bioenergy, on other hand, has immense potential in India and can mitigate greenhouse gas emissions, while navigating the country towards a sustainable future and helping it achieve energy security by lowering dependence on fuel imports, besides increasing farmers’ income by turning them from food producers to fuel producers.

Biofuels can be produced from agriculture and forest residue, municipal solid waste, cow dung and used in the existing vehicles. However, procuring the required amounts of feedstock, and mitigating food-versus-fuel issues is still a challenge and a critical step for the sustained use of these alternative fuels as primary vehicular fuels. These have the ability to decompose naturally in the environment and do not add to pollution in the same way as fossils fuel.

According to projections by the International Energy Agency (IEA), India is expected to overtake China to become the third-largest producer of ethanol by 2023. The production volume of biodiesel is forecasted to increase to 200 million litre in 2023.

Currently, the transport sector, railways and aviation are the major end-users of biodiesel, produced from vegetable oils, yellow grease, used cooking oils, or animal fats. The biodiesel market size in India reached USD 383.4 million in 2022. The International Market Analysis Research and Consulting Group (IMARC Group) expects the market to reach USD 643 million by 2028, exhibiting a growth rate (CAGR) of 9.36 per cent during 2023-28.

The Accelerators

In May 2022, India amended the National Biofuels Policy to increase the domestic ethanol output from sugarcane and multi-feed stocks. It has also expanded the excise duty exemption for biofuels to encourage the blending of higher proportions of ethanol and components of vegetable oil with gasoline and diesel. Other major programmes launched to support biofuels production include the SATAT scheme to encourages entrepreneurs to set up plants, produce and supply Compressed Bio Gas (CBG) to Oil Marketing Companies for sale as automotive and industrial fuel, Pradhan Mantri JI-VAN Yojana for providing financial support to integrated bio-ethanol projects for setting up 2G ethanol projects using lignocellulosic biomass and other renewable feedstocks, and grants for research and development in the bioenergy area.

The Ministry of New & Renewable Energy (MNRE) has notified the National Bioenergy Programme for a period 01.04.2021 to 31.03.2026 with an outlay of Rs 858 crore under Phase-I.  This apart, the Ministry recently supported an intensive Biomass Bank project to encourage rural participation and enterprise through a farmer-driven network of rural biomass businesses.

India has signed a series of bilateral agreements with countries in South Asia to promote the production and use of biofuels through partnerships and collaborations. In addition, the recently-announced Global Biofuels Alliance aims at bringing together biofuel producers and consumers with the intent to strengthen global biofuels trade for a greener sustainable future.

The Bottomline

Making the best of both the worlds, India is strategically striking a synergy between EVs and ethanol-blended fuels in order to reduce emissions further. It is evident that India has recognized the potential of both these options and is investing in research and development, infrastructure development, technologies, and public awareness to drive their adoption.

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