India’s percentage of cleaner fuels and electric cars (EVs) is rapidly increasing as the country’s automobile emission rules become more stringent. Electric or cleaner fuel vehicles now account for about 5% of all passenger vehicle (PV) sales in India.
According to JATO Dynamics statistics, the percentage of battery electric cars (BEVs), hybrid EVs, plug-in hybrids, and compressed natural gas (CNG) vehicles that made up all PV sales in 2023–2024 increased from 9.29% in FY22 to 19.23% in 2023–2024.
In contrast, the percentage of internal combustion engines that run on gasoline and diesel has decreased. Diesel’s percentage of ICE vehicles has decreased from 18.83% in FY22 to 17.79% in FY24, while the share of gasoline-powered vehicles has decreased from 71.88% in FY22 to 62.98% in FY24. The percentage of hybrids has increased from 1.06 percent in FY23 to 2.15 percent in FY24.
In response to consumer demand for automobiles with lower operating costs, auto original equipment manufacturers (OEMs) have concentrated on introducing CNG versions of their well-liked models. For instance, a number of well-known models, including the Maruti Suzuki Brezza CNG (2023), Tata Punch CNG (2023), Maruti Suzuki Grand Vitara CNG (2023), and Tata Altroz CNG (2023), debuted with their CNG avatars last year.
According to market buzz, CNG variants of the Tata Nexon and the Kia Sonet are also expected.
Maruti Suzuki India (MSIL), the biggest passenger car manufacturer in India, has stated that by FY31, it anticipates that 15-20% of its vehicles will be electric vehicles (EVs), with another 25% possibly being hybrids. The other vehicles will run on compressed biogas (CBG), ethanol, and CNG.
MSIL declared in October of last year that it would introduce six electric vehicles in the upcoming years during an investor presentation. It had stated that “the product mix going forward will include petrol cars, EVs, hybrid cars, cars using compressed natural gas (CNG), cars equipped with at least 20% ethanol, and possibly cars running on compressed biogas.”
According to the firm, “This combination of technologies is required in the context of meeting the carbon footprint targets and taking into account the infrastructure situation, customer buying power, and the availability of raw materials in the nation for generating clean power.”
Conversely, as of Q4FY24, 13% of PV sales for Tata Motors, which dominates the EV market with a 73.1 percent share, came from CNG, and 16% came from EVs. CNG and EV sales together now account for 29% of total sales. By March 2026, the business, which presently offers four EV vehicles, hopes to introduce six more.
By FY30, EV penetration in the Indian auto sector is expected to reach 20%, up from roughly 2% in the previous fiscal year, according to Tata Motors. By FY30, the company wants to reach an EV penetration of roughly 30% within its own portfolio.
India’s energy efficiency agency, BEE, has set stringent targets to reduce automotive emissions and has stated that battery electric vehicles will be central to its clean mobility strategy.
Moreover, automakers must further lower their pollution footprint in accordance with the proposed changes to the corporate average fuel economy (CAFE-III) regulations. According to BEE’s most recent draft, which is being distributed among industry players, including OEMs, CAFÉ III standards will be adopted between 2027 and 2032. According to the World Harmonized Light Vehicles Testing Procedure, the carbon emission objectives for CAFÉ III and CAFÉ IV standards are 91.7 and 70 mg CO2 per kilometer, respectively.
The CAFE standards restrict carbon emissions from all vehicles sold in a fiscal year and are applicable to an OEM’s total vehicle output. Because exceeding these restrictions carries heavy fines, it incentivizes automakers to create more environmentally friendly and fuel-efficient automobiles. A fine of Rs 25,000 per car will be applied if an OEM’s average fuel economy above the maximum by up to 0.2 liters per 100 km, according to the plan. The fine increases to Rs 50,000 per car if it surpasses by more than 0.2 liters per 100 kilometers.
The government and the sector are in talks on CAFÉ III standards, a source close to the situation told Business Standard. “It is difficult to meet these emission limits since doing so will result in large price increases, which will reduce demand. However, one thing is certain: EVs and cleaner fuels in general are the long-term trends, according to the managing director of a major OEM.