India’s EV Policy Plunge: Some Gains, Many Deep-Tech Pitfalls

Scandals like BluSmart and deep-tech failures like Log9 Materials have exposed structural flaws within India’s ecosystem. The irony is that the system favours scale and speed, rather than depth of innovation. 

Momentum Rising But With A Shallow Core

Despite the growth in the Indian EV market, the pace remains far off the ambitious 2030 targets. In FY25, EVs accounted for 7.8 per cent of the total vehicle sales, which is a modest increase from 7.1 per cent in FY24. It underscores a slow adoption curve, especially considering the scale needed to meet climate and mobility goals. 

The increase in the number of EVs can be attributed to sales of passenger vehicles rising at 4.1 per cent in 2025, up from 2.6 per cent in 2024. Impact of FAME II, availability of charging, and rising consumer awareness are also major factors. However, the overall numbers are still lagging. India needs to grow at 5x the current rate of adoption to meet 2030 targets. The current discrepancy lays bare the existing ambition-action gap in the EV policy landscape. 

Supercharging this segment requires catalysing through stronger financing, deep-tech innovation, and a more inclusive policy environment. The current growth trajectory is insufficient not only from a climate perspective but also from the standpoint of industrial competitiveness and energy security. 

Assembly Vs Invention Conundrum

The most recent example comes from BluSmart’s abrupt shutdown in April 2025, after the Securities and Exchange Board of India (SEBI) accused co-founder Anmol Jaggi of diverting funds meant for EV procurement towards luxury spends.

This scandal, involving over 8,000 electric taxis, affected thousands of BluSmart fleet drivers across Delhi, Mumbai and Bengaluru, exposing the deep internal financial controls and oversight on the part of EV startups. 

Log9, on the other hand, had a quieter but equally significant downfall. The Bengaluru-based startup, which had raised more than US$ 60 million to develop ultra-fast Lithium Titanate Oxide (LTO) batteries, could not compete with much cheaper Chinese Lithium Iron Phosphate (LFP) alternatives.

Operating costs kept rising while battery processes fell. Chinese LFP cell prices were down from around US$ 95 per kilowatt-hour to as low as US$ 45 to US$ 53 in 2024, leaving Log9’s LTO cells around four times more expensive.

With limited policy support for upstream innovation and no guaranteed market procurement pipeline, Log9 had to lay off most of its employees, shut manufacturing sites and get into distress discussions with its investors. 

Other EV startups are also facing operational strain. Ola Electric is plagued with construction delays at its gigafactory, and its planned IPO has been indefinitely postponed in the midst of execution challenges, leadership woes, and regulatory scrutiny. Bounce Infinity, which was once a promising battery-swapping startup, has scaled down its services due to a chronic funding shortfall and poor market demand.

Euler Motors has pivoted from retail sales to B2B business financing solutions after encountering high customer acquisition costs and insufficient financing options for its SMEs. Altigreen has shifted its focus to export markets, after its struggles with domestic funding bottlenecks and stalled subsidy disbursements. 

Collectively, these episodes have shown a fractured EV policy framework that rewards rapid scaling and deployment, whilst there is insufficient support to foundational innovation, especially in upstream battery technologies.

If India has to do well in manufacturing and pivot from just EV assembly, it will be crucial to look beyond subsidies and tailor incentives to include more robust funding, governance oversight, and demand guarantees for true deep-tech solutions. 

What’s Working & What’s Not

Although India’s EV ecosystem has made progress, but is very short-sighted, ie. towards demand incentives rather than innovation support. The FAME II scheme, launched in 2019 with a Rs 11,500 crore outlay, has disbursed only 69 per cent of its funds, approximately Rs 7,940 crore, as of early 2025.

With a focus only on end-use demand subsidies, no support has been given towards battery innovation, thermal management and vehicular intelligence — critical components in ensuring holistic EV capabilities.

Additionally, support for private cars and commercial trucks has been neglected, the latter being crucial for faster uptake of EVs. Lastly, subsidy caps ranging from Rs 10,000 to Rs 15,000 per kWh have failed to achieve cost parity with combustion engines. Initially conceived to encourage giga-scale cell production, the PLI scheme has a minimum capex requirement of Rs 250 crore, a massive deterrent for early-stage, deep-tech startups.

These deep-tech innovations require support from lab-pilot-deployment in the form of smaller strategic investments. Consequently, established conglomerates remain the main beneficiaries, leaving startups without a realistic pathway to access a large-scale financing network and ecosystem. 

Another area of concern is on the charging infrastructure side. Even with 25,202 public EV chargers installed, the EV-to-charger ratio remains severely mismatched at 135:1, in stark contrast to the global ratio of 6-20 vehicles per charger.

This massive infrastructure shortage has hampered consumer confidence, especially in non-metros where charging is still unavailable. 

Together, the gaps highlighted above underscore a critical mismatch between India’s climate goals and actionable frameworks to support them. While schemes like FAME and PLI helped initially, the limitations soon became visible and this could jeopardise long-term EV ecosystem development. 

These countries have used a mix of milestone-linked grants, co-investment mandates and public demand guarantees to fast-track deep-tech ecosystem creation. India needs to adopt similar structured instruments to move beyond pilot-stage support and unlock scalable, globally competitive innovation. 

A Deep-Tech Lens On Barriers & Solutions

Four critical barriers need mentioning. First, the high break-even threshold for battery innovations — typically, 5-10 years to achieve commercial viability, clashes with the 3-5 year expectations of VCs.

Second, both public and private investors demonstrate a capital allocation bias, thus prioritising faster returns and lower risk ventures over science-driven innovation.

Third, procurement models have failed to support emerging tech as there are no anchor clients for deep-tech startups. Public procurement by fleets and government programmes has their focus set on vehicle volumes and not the performance or novelty of underlying technologies.

Lastly, there is a major disconnect between patents and product development. Many Indian-origin battery IP is often licensed or sold overseas, particularly to Chinese or Korean entities, thus resulting in long-term technology leakage.

From Assembling To Inventing

To address its current woes, India needs a strategic five-point policy response. First, create a deep-tech mobility fund as done by Germany, the US, and China, with clear milestone-based disbursement goals, to unlock early-stage battery innovation.

Second, support SMEs through PLI schemes to lower entry thresholds and include innovation-based eligibility, letting in smaller firms. Third, introduce anchor procurement contracts that commit public fleets to purchase new technologies from startups over a multi-year period.

Fourth, create a shared access R&D and testing infrastructure for battery management systems, cell chemistry, and a simulation environment accessible to early-stage startups (interoperable solutions).

Finally, PLI beneficiaries must be mandated to co-develop technologies with startups by allocating a certain portion (5-10 per cent) of their awarded funds for joint research and collaboration. 

Without structural support for deep-tech pioneers, India will remain a high-volume assembler rather than a true-blue innovation giant. India has to scale innovation to meet its 2030 goals, or risk a future where patents never become powertrains.