India’s electric vehicle (EV) market has undergone a dramatic transformation over the past decade, with annual sales expanding from roughly 50,000 units in 2016 to nearly 2.5 million in FY 2025-26. To support this momentum, the country expanded its public charging network from 5,151 stations in 2022 to 52,718 by July 2026. However, severe structural and fiscal bottlenecks threaten to stall future adoption. A September 2026 report by the Institute for Energy Economics and Financial Analysis (IEEFA), titled Improving the EV charging experience in India: Beyond charger deployment, exposes a significant rift between government targets, capital outlays, and tax policy framework.
The ₹2,000-Crore Subsidy Deficit vs 2030 Targets
Under the PM E-DRIVE scheme, the central government allocated ₹2,000 crore toward developing public EV charging infrastructure. Assuming a full 100 per cent subsidy covering both upstream infrastructure and charger hardware, IEEFA estimates this allocation will fund approximately 18,811 charging points under the policy target mix.
However, achieving India’s policy vision of 30 per cent overall EV adoption by 2030 requires an estimated 1.32 million public chargers. The current PM E-DRIVE capital allocation covers less than 2 per cent of this requirement. Although overall EV adoption reached 12.7 per cent in July 2026—led by electric two-wheelers at 11.2 per cent and electric cars at 7.9 per cent—scaling adoption further requires a widespread, reliable, and financially viable charging ecosystem.
The financial pressure on Charge Point Operators (CPOs) is exacerbated by the substantial cost of electrical grid integration. IEEFA notes that upstream grid connection and capacity upgrades can represent up to 50 per cent of the total setup cost for a public charging station. When combined with low initial charger utilization rates, absorbing these grid integration costs places a heavy financial burden on private CPOs. IEEFA recommends that upstream grid upgrades be funded independently through specialized infrastructure or development financing channels rather than requiring operators to bear the entire cost burden.
Tax Inequity: The 18% GST Disparity on Charging and Battery Swapping
A critical tax barrier affecting EV expansion is the structural disparity within India’s Goods and Services Tax (GST) framework. While purchasing an electric vehicle attracts a concessional GST rate of 5 per cent, the electricity and service delivered through public charging points is classified differently. Currently, public EV charging services carry an 18 per cent GST rate. Similarly, battery-swapping services attract an 18 per cent GST levy.
This tax differential creates a notable fiscal mismatch:
- Vehicle Acquisition vs. Operational Cost: Buyers benefit from a lower 5 per cent GST rate when purchasing an EV, but face an 18 per cent tax penalty whenever they purchase public charging services or utilize battery swapping.
- Impact on Non-Home Chargers: EV owners without private parking—particularly residents of multi-household or high-rise urban developments—rely on public charging or swapping networks. The 18 per cent GST rate directly increases their operational expenditure relative to owners who can charge at home.
- Margin Pressure on CPOs: Because CPOs must collect and remit 18 per cent GST on retail charging fees, their end-user pricing must absorb this cost, impacting demand and delaying profitability for low-utilization chargers.
To eliminate this tax arbitrage, IEEFA advocates reducing the GST rate on both public EV charging services and battery-swapping services from 18 per cent to 5 per cent. Harmonizing GST across EV purchases, charging services, and battery swapping would create tax equity, lower charging costs for consumers, and improve the business model for public network operators.
Reframing Subsidies: Operational Compliance and Uptime Mandates
Beyond capital costs and tax rates, operational reliability remains a major barrier. Expanding public charger counts does not automatically translate into improved charger accessibility. An IEEFA case study conducted in 2024 across South, Central, West, and East Delhi revealed that nearly 84 per cent of examined EV public chargers were non-functional.
This widespread operational breakdown highlights the limitations of unconditional upfront capital subsidies. IEEFA recommends shifting fiscal support away from basic installation milestones toward strictly enforced, performance-linked compliance metrics. To qualify for subsidies, CPOs should meet specific operational standards, including:
- Minimum Uptime Obligations: Mandating strict charger availability and operational uptime thresholds.
- Time-Bound Fault Resolution: Legally binding maximum timeframes for resolving technical breakdowns and grid faults.
- Tariff and Status Transparency: Enforcing public disclosure of live charging availability and standardized pricing tariffs.
- Interoperability & Payments: Resolving hardware/software fragmentation by establishing open standards and unified cross-network payment systems to replace proprietary apps and closed digital wallets.
- Monitored Session Uptime: Validating subsidy disbursements against verified, successful charging sessions.
The report also suggests establishing dedicated government-backed service and upgrade programs to repair and modernize inactive public chargers installed under earlier subsidy allocations.
Grid Integration, Building Regulations, and Policy Outlook
To support long-term grid stability and lower user costs, IEEFA recommends introducing time-of-use (ToU) electricity tariffs. Structured ToU tariffs incentivize EV owners to charge during off-peak hours or periods with high renewable energy generation, lowering electricity costs while mitigating peak grid demand.
Addressing urban home-charging constraints is equally critical. Current Model Building Bylaws advise that new commercial and residential developments allocate at least 20 per cent of parking spaces as EV-ready. However, these provisions remain voluntary guidelines rather than mandatory requirements. To resolve this, IEEFA suggests establishing a formal statutory “right to charge” for residents with designated parking spaces, provided installations adhere to safety and grid compliance standards.
In summary, meeting India’s 2030 EV targets will require moving beyond capital allocations under PM E-DRIVE. Broadening adoption will depend on addressing grid upgrade funding, enforcing performance-based compliance standards for CPOs, and reducing GST on public charging and battery swapping from 18 per cent to 5 per cent.
Frequently Asked Questions
The report highlights that the ₹2,000-crore PM E-DRIVE allocation will support approximately 18,811 charging points, which covers less than 2 per cent of the 1.32 million public chargers required to achieve India's 30 per cent EV adoption target by 2030.
EV vehicle purchases currently attract a concessional GST rate of 5 per cent, whereas public EV charging services and battery-swapping services are taxed at an 18 per cent GST rate.
IEEFA proposes reducing the GST rate on both public EV charging services and battery-swapping services from 18 per cent to 5 per cent to align with vehicle purchases, alongside implementing time-of-use tariffs.
The 2024 case study revealed that nearly 84 per cent of examined public EV chargers across South, Central, West, and East Delhi were non-functional.
