In The Great Indian EV Race, States Are The Real Drivers

That devolution has turned the world’s largest democracy into a lively contest, with the real action unfolding far from Raisina Hill. 

State capitals are now laboratories for inventive subsidy menus designed to encourage both consumers and manufacturers. Every rupee saved at a showroom, every hectare leased in an EV park, and every lifted toll barrier could lock in decades of high-value manufacturing and green-collar employment.

Yet the race is also surfacing new questions about coordination, circularity and who pays when the chargers rust.

What’s On The Menu?

State EV policies typically offer two kinds of support: Incentives for buyers to switch, and benefits for manufacturers to invest.

As of mid-2025, over 25 states and Union Territories have notified dedicated EV policies. They are mixing and matching from a common policy cookbook. Some incentives aim at buyers to drive demand, while others target manufacturers to invest and ramp up production.

On the consumer side, incentives typically take the form of purchase subsidies, tax waivers, and scrappage bonuses to make EVs more affordable. These are especially targeted at two- and three-wheelers, and increasingly at commercial fleets.

On the industry side, governments are offering capital subsidies, land at concessional rates, and exemptions on stamp duty and electricity tariffs to attract manufacturers and charging operators.

Some states are mandating charging infrastructure in new housing and along highways; others are experimenting with battery swapping and offering research and development (R&D) support, particularly for gig economy vehicles and small-scale logistics.

In parallel, fleet electrification mandates are being used to nudge public transport, e-commerce, and government departments towards electric options.

The ingredients are common, but the recipe is local, and that’s where the real competition begins.

"Whether it’s EV or any other sector, the first questions are land, ease of doing business and a supportive supply chain. Incentives help, but these basics decide where a factory goes," Nirupama Soundararajan, CEO and co-founder, Policy Consensus Centre, told The Secretariat.

Different Playbooks, Same Goal

EV incentives are customised at state level, and so policy is a differentiator. 

In the south, Tamil Nadu has doubled down on manufacturing heft. A revised 2023 policy stretches road-tax and registration waivers to 2026, offers land at up to a 50 per cent discount inside vendor parks and has already tempted Ola Electric, Ather and BYD to sign multi-billion-rupee memoranda for plants and a 20 gigawatt-hour (GWh) cell factory. 

Neighbouring Karnataka is fighting back with an overtly high-tech pitch. The Clean Mobility Policy 2025-30, unveiled in February, pledges capital subsidies of up to 25 per cent, three “mobility clusters” and support for 25 hydrogen fuelling stations.

"States that already host big auto clusters — Tamil Nadu, Karnataka, Maharashtra — have the skills and vendor networks to pivot to EVs faster than places starting from scratch,” Soundararajan notes.

Karnataka, already third in EV registrations at 2.5 lakh, is chasing Rs 50,000 crore of fresh investment and one lakh jobs by 2030.

Maharashtra, meanwhile, is trying to reclaim ground. Its 2025 policy targets Rs 2,000 crore in investment and aims to corner 12.5 per cent of nationwide EV sales. Ather chose Aurangabad for a new Rs 1,000 crore plant in 2024, and Pune remains a key hub for Tata’s EV engineering and battery efforts.

Early-mover Gujarat built momentum with the country’s richest per-kilowatt-hour buyer rebate and a 25 per cent grant for the first 250 charging stations; it now leans on electricity-duty waivers and a manufacturing policy that reimburses up to 12 per cent of fixed capital to battery and component makers.

Telangana has aimed its November 2024 update at the gig economy with 100 per cent lifetime waivers on road tax and registration for everything from delivery scooters to employee buses run until 2026, and land inside forthcoming EV parks is being offered on concessional leases.

Lacking space for factories, Delhi is trying to move markets instead. Its draft EV Policy 2.0 proposes household caps on petrol cars, a phase-out of fossil-fuel two-wheelers from August 2026, and fatter scrappage cheques funded by a green levy on petrol sales.

The north’s heavyweight, Uttar Pradesh, is betting on scale with a 30 per cent capital subsidy, capped at Rs 1,000 crore, for the first of two one-gigawatt battery plants, plus a 500-acre EV park outside Kanpur that ties land leases to component localisation targets. 

Different as these playbooks are, they share a calculation: Today's investment can secure tomorrow’s factories, jobs and climate gains.

The Road Ahead

If the first phase of policy-making was about luring assembly lines, the next must confront what happens when those batteries age out. 

"Manufacturers will not put down billions unless they see steady demand. India has missed its FAME target for EV cars, so until upfront prices fall or incentives improve, scale will remain elusive,” says Soundararajan.

Maharashtra has proposed battery-recycling hubs and viability-gap funding for DC chargers into its rule-book, signalling a shift towards a circular model.

Experts are calling for an independent interstate council to track implementation, publish comparable data on incentive uptake and warn against subsidy races that merely shuffle factories across state borders.

Coordinated tariff reform, open-access power for fast chargers and interoperable battery-swapping standards can prevent a patchwork of policies from becoming a patchwork of bottlenecks.

For now, though, the competition is delivering what policy designers hoped for: larger cheques, faster chargers and a race towards greener transport. 

In a country where consumers still ask, “Kitna deti hai?” or “How much mileage” a vehicle gives, state rivalry might just be the extra shove India’s EV revolution needs.