The PLI-Auto scheme has greenlit 257 manufacturing units across 17 states, with Maharashtra topping the list at 77, followed by Tamil Nadu with 46.

With its large, diverse economy and booming industrial sector, the state has the potential to better its capabilities and hold be a torchbearer for the ecosystem. Yet, this transition presents significant challenges. 

Central to navigating this landscape will be the role of micro, small and medium-sized enterprises (MSMEs) — nimble, innovative, and crucial to ensuring the success of this transformation.

These MSMEs, mostly micro and informal, struggle with financial instability, limited access to credit, and a focus on short-term goals over long-term planning. To align India's low-carbon transition with socioeconomic growth, it's vital that vulnerable MSMEs and their workers benefit from the EV shift.

Maharashtra’s transition to electric vehicles represents a monumental shift that promises long-term economic, environmental, and social benefits. Here’s why the state is uniquely poised for success:

EV Manufacturing Powerhouse

Maharashtra has long been an industrial hub, housing the country’s largest automotive manufacturing companies. With established giants like Tata Motors and Mahindra & Mahindra leading the charge, the state is well-positioned to scale its EV manufacturing sector.

The demand for EVs in India is increasing rapidly, and Maharashtra is not just responding to this demand but is set to become a key global player in EV manufacturing. 

Initiatives, Incentives

On March 15 2024, the Indian government approved a US$ 500 million EV Policy, offering incentives to attract global investments and position India as a top EV manufacturing hub. The manufacturing timeline is set for three years to start EV production, with a target of 25 per cent domestic value addition (DVA) by Year 3 and 50 per cent by Year 5.

The Maharashtra Electric Vehicle Policy 2021 aims to create a conducive environment for EV adoption through financial incentives, tax benefits, and infrastructure development. The state has set ambitious targets for the installation of EV charging stations and a push for 25 per cent electrification of public transport and 10 per cent of overall EV penetration by 2025. 

Electrification of bus fleets began in 2021 with the procurement of 150 e-buses under the FAME II scheme. In 2022, the Bombay High Court appointed a committee to revive Maharashtra State Road Transport Corporation (MSRTC), which proposed expanding the fleet from 15,000 to 22,000 buses by 2025.

To meet this goal, MSRTC adopted a Public-Private Partnership (PPP) model, planning to acquire 5,150 e-buses and 500 diesel buses on Gross Cost Contract, along with 2,200 diesel buses. Thus, the goal to have 25 per cent electrification by 2025 seems to be plausible. As such, policy measures are designed to ensure the state leads the way in EV adoption in India.

Urban Mobility Innovation

Major cities like Mumbai, Pune and Nagpur are experimenting with new urban mobility models, including electric public transportation and shared mobility services. To reduce congestion, cities need interventions towards Public Transport (PT). While Metro systems in Mumbai, Pune and Nagpur lay a solid foundation, buses remain crucial, especially in smaller cities where Metros aren't viable due to high costs and lower population density.

Today, India has around 3 lakh buses operated by state undertakings, but experts state the country needs 30 lakh to keep up with its population. Figure 3 below highlights the minimum requirement of buses required per 10,000 people.

Despite this glaring shortfall even in comparison to the minimum requirement for buses, we continue to underfund the bus system. Public transport has historically received less than 1 per cent of the annual road transport budget, and that’s simply not enough to meet the growing demand.

It's high time we prioritise buses and invest in the future of our cities. By incorporating EVs into public transportation fleets, Maharashtra has the opportunity to create a cleaner, more efficient and cost-effective urban transport ecosystem. 

Figure 3 above highlights that Maharashtra's EV policy has led to just 711 EVs being procured — only 22 per cent of the target fleet — meaning a massive 91 per cent growth is needed to hit 100 per cent electrification by 2027.

With the share of public transport dropping from 89 per cent to 65 per cent, there's a major opportunity for BEST buses to align with Mumbai’s trains and Metro systems, optimising routes through strategic planning, as successfully done by Delhi Transport Corporation (DTC). 

Challenges Ahead

Small and medium-sized enterprises (SMEs) are often overlooked in large-scale transitions like this, but they are the silent drivers that can make or break the success of the EV ecosystem. Here’s how Maharashtra’s SMEs are poised to be key enablers of the state’s EV transformation:

Local Manufacturing and Component Supply: While large automakers will undoubtedly play a critical role, SMEs can take charge in the supply of components, including batteries, electric motors and power electronics. By localising the supply chain for these crucial EV parts, SMEs can help reduce costs, mitigate supply chain risks and make EVs more affordable.

Maharashtra’s auto manufacturing sector is crucial to India’s economy, but the shift to EVs presents both huge opportunities and significant challenges, especially for MSMEs, which make up 97 per cent of the industry.

With over 200,000 workers at stake, these small and medium enterprises face the risk of being left behind by rapid changes in technology, production, and market demands. Without proactive support, this transition could jeopardise both businesses and livelihoods.

Charging Infrastructure Development: SMEs are uniquely positioned to address the lack of charging infrastructure, especially in tier 2 and tier 3 cities and rural areas. Local entrepreneurs can invest in setting up charging stations in high-traffic areas such as shopping malls, office complexes, and highways. This would drastically improve the EV charging network and promote wider adoption.

Innovation in EV Technology: Maharashtra’s robust startup ecosystem, particularly in Pune and Mumbai, is a breeding ground for innovation. SMEs in the tech and automotive sectors can spearhead advancements in battery technology, autonomous driving, and vehicle-to-grid (V2G) solutions.

Startups focused on the development of smart charging solutions, fleet management systems, and EV battery recycling will play an essential role in creating a sustainable ecosystem.

An example is Ather Energy setting up its third manufacturing facility in Bidkin, Maharashtra, to produce electric two-wheelers and battery packs. This new facility will reduce logistics costs and speed up delivery, bringing Ather closer to key markets.

The Rs 2000 crore investment, which will create 4,000 jobs, adds to Maharashtra’s supportive business environment and EV-friendly policies.

Skilled labour and service networks: SMEs can address the issue of a shortage of skilled labour by offering specialized training programs, creating job opportunities, and establishing service networks for EV maintenance and repairs.

As the number of EVs on the road increases, the need for local service centres will be paramount. SMEs can fill this gap, creating a comprehensive support system for EV owners.

In November 2024, WRI India hosted a major event on Maharashtra's shift to EVs, bringing together over 100 stakeholders, including industry leaders and policymakers. Key highlights included WRI India’s partnership with the National Skill Development Corporation (NSDC) to boost green skills and support automotive MSMEs in adopting EV tech.

The event also unveiled a publication with strategies for MSMEs, focusing on product diversification and upskilling. With Maharashtra at the forefront of India’s automotive sector, addressing these challenges is vital for a sustainable EV future.

Public awareness and consumer trust: SMEs, being more agile and closely connected to their communities, can help educate consumers about the benefits of EVs. They can promote EV adoption through awareness campaigns, trials and collabourations with local governments and organisations.

A Green Future Powered By MSMEs

Maharashtra is leading India’s EV revolution, with the state driving much of the country's EV manufacturing under initiatives like the PLI-Auto scheme. While its strong industrial base, including automotive giants like Tata Motors, positions it as a key EV player, the role of MSMEs is crucial to the state's success.

These nimble businesses, often overlooked, are vital to localising the EV supply chain, developing charging infrastructure, and fostering innovation in EV technology.

With government incentives like the Maharashtra Electric Vehicle Policy 2021 and the US$ 500 million national EV Policy, the state is setting ambitious EV targets. However, challenges remain, particularly in supporting MSMEs with financial instability and the need for skilled labour.

Yet, these enterprises can play a critical role in ensuring the success of EV adoption, from supplying components to offering specialised EV services. Maharashtra’s MSMEs, backed by robust government policies and an innovative startup ecosystem, are key to a sustainable, inclusive EV future.

(The writer is a public policy and urban transportation enthusiast and specialist. Views are personal)