India’s electric transport sector has attracted significant capital over the past five years, but a cohesive investment framework is critical to meet the country’s 2030 electric vehicle goals, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA).
India’s 2030 EV Targets and Investment Requirements
India aims for electric vehicle sales to account for 30 percent of private cars, 70 percent of commercial vehicles, 40 percent of buses, and 80 percent of two- and three-wheelers by 2030. Achieving these targets will require large-scale investment in EV manufacturing, charging infrastructure, and supporting ecosystems.
The IEEFA report, Capital flows in India’s electric transport sector, presents the first consolidated assessment of realised investments between 2020 and 2025. It identifies funding gaps and outlines strategies to mobilise capital for the next phase of India’s electric mobility transition.
INR2.23 Lakh Crore Deployed, But Only 18 Percent of 2030 Need
IEEFA estimates that INR2,23,119 crore, approximately $25.6 billion, was deployed across three core areas of India’s electric transport ecosystem from 2020 to 2025. Manufacturing capacity accounted for the largest share, followed by public subsidies and incentives, and EV charging infrastructure.
While INR2.23 lakh crore represents strong capital mobilisation within five years, it covers only about 18 percent of the INR12,50,000 crore required by 2030.
“Mobilising the remaining INR10,26,881 crore, about $117.82 billion, by 2030 will require systemic financing reforms,” said Subham Shrivastava, Climate Finance Analyst at IEEFA.
Manufacturing Dominates Capital Deployment
Internal accruals contributed the largest share of realised EV manufacturing investment at INR1,59,701 crore, or $18.32 billion. Debt financing followed at INR36,738 crore, or $4.22 billion, while equity accounted for INR6,455 crore, or $740 million.
However, investment patterns vary across vehicle segments. The electric three-wheeler segment, characterised by a fragmented OEM base, relied mainly on internal accruals and some debt. In contrast, electric four-wheelers and two-wheelers, led by established incumbents, showed a more diversified financing mix.
From 2020 to 2025, electric three-wheelers attracted around 78 percent of segment-wise investments due to commercial-scale operations and market maturity. However, investment announcements in 2024 and 2025 indicate a shift towards electric four-wheelers, driven by rising demand for electric cars.
Public Subsidies and FAME Scheme Support
Government incentives under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles scheme and other Union and state-level policies played a key role in accelerating adoption. Between FY2020 and FY2024, subsidies totalling INR18,251 crore, or $2.09 billion, were disbursed.
Despite policy support, charging infrastructure investment remains inadequate.
Charging Infrastructure Lags Behind
Public EV charging infrastructure expanded significantly from 5,151 chargers in 2020 to 39,485 in 2025. However, India’s charger-to-EV ratio remains well below global benchmarks.
Public estimates suggest that INR20,600 crore, or $2.36 billion, will be required in charging infrastructure to meet 2030 targets. Based on realised investment calculations, only 9.6 percent of this amount was deployed between 2020 and 2025, indicating a major funding shortfall.
Charith Konda, Energy Specialist at IEEFA, noted that public EV charging remains an unproven business model, with many stations reporting low utilisation rates and high upfront costs, limiting investor interest.
High Borrowing Costs Hindering EV Adoption
Commercial EV borrowers face interest rates ranging from 15 percent to 33 percent, eroding the total cost of ownership benefits typically associated with electric vehicles. Elevated financing costs suppress demand, delay fleet expansion, and slow manufacturing growth.
“The binding constraint is not a lack of capital in the system, it is how EV risk is priced,” Shrivastava said, highlighting concerns over battery performance, residual values, and cash-flow stability.
Integrated EV Financing Platform Proposed
To bridge the INR10.3 lakh crore, or $117.82 billion, investment gap over the next five years, IEEFA recommends structural risk-sharing mechanisms that reduce credit costs and attract private capital.
The report proposes an integrated EV financing platform combining partial credit guarantees, residual value protection, battery-as-a-service models, and co-lending frameworks. Development finance institutions would anchor the platform – Small Industries Development Bank of India for MSMEs and small fleet operators, and India Infrastructure Finance Company Limited for larger fleets, bus deployments, and institutional buyers.
According to Saurabh Trivedi, Sustainable Finance Specialist at IEEFA, manufacturers require predictable demand signals to scale capacity, and affordable credit is central to unlocking commercial-scale deployment.
Towards a Self-Sustaining EV Ecosystem
As EV sales volumes increase and performance data improves, risk premiums could decline, underwriting standards could stabilise, and capital recycling through securitisation may become viable. This would create a self-reinforcing investment cycle where lower financing costs drive higher adoption and attract more capital.
BABURAJAN KIZHAKEDATH