India’s electric vehicle (EV) space witnessed rapid growth that is now set to transform the country’s industrial manufacturing landscape, according to a report that said the rising demand for EVs has created significant opportunities for domestic manufacturers, deep localisation and increased investments.
While retail sales have been rising sharply and overall penetration is now at a record level, the country is now entering a phase of scale, technology and supply-chain development that will determine the next stage of EV adoption and manufacturing in India.
In August 2026, India’s EV retail sales rose 52.9 percent year-on-year (YoY) to a record 2,98,448 units. Overall, the penetration has climbed to 12.3 percent from 9.5 percent a year ago, suggesting broad-based growth in all vehicle categories, from two-wheelers and three-wheelers to passenger vehicles and commercial vehicles.
The boom in demand is now seeing adoption rates rise across a wide spectrum of income groups and geographies, powered by policy push, product proliferation and improved charging infrastructure. The next phase of growth in EV demand will be driven by localisation, manufacturing scale and technological development and not merely by demand-generation, the report said.
As the volumes rise, the demand for batteries and other key components is set to balloon, creating significant opportunities for domestic manufacturers and suppliers.Battery energy storage systems are expected to play a critical role in India’s renewable energy transition as the cumulative demand for battery storage is forecast to reach 160 GWh by FY29.
Meanwhile, the report warned that battery imports in India could rise to 95-100 GWh by FY30 if the penetration of EVs reaches the level targeted for different categories of vehicles. The rising demand for batteries and components will create opportunities for scaling manufacturing capacities in India for cells and packs, which will reduce the country’s reliance on imports.
Investments are already being made in gigafactories, component manufacturing units and other electronics and ancillary manufacturers to meet the rising demand.
Production-linked incentive (PLI) schemes, as well as state governments’ initiatives and support, are also helping attract investments in the country’s EV manufacturing ecosystem. Improved domestic supply chains can help decarbonise the power sector and contribute to energy security, as well as create high-skilled manufacturing jobs and put India in a position to capture global markets for clean mobility technology and manufacturing.
With higher EV adoption, the focus is now on the growth of the ecosystem to sustain and scale the demand. The current ramp-up in EV demand is set to usher in India’s next phase of manufacturing-led growth.