2026 Will Test India’s EV Dreams

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Good Morning. India’s electric vehicle (EV) story is moving forward, but in 2026, its ambitions will face some constraints. As government incentives fade and hybrids find more takers, and as buyers prove to be price sensitive, the question now is whether EV adoption can stand on its own, without constant policy crutches.

India's benchmark indices ended on a mixed note on Tuesday. The BSE Sensex closed at 85,524.84, losing 42 points or 0.05%. The NSE Nifty 50 closed at 26,177.15, 4.75 points or 0.02% higher.

In other news, the Competition Commission of India is probing IndiGo for information over the December crisis. Meanwhile, in this week’s Build on Blockchain, the Employees’ Provident Fund Organisation (EPFO) could gain from using the technology.

India’s EV Ambitions Will Meet Hard Reality Heading Into 2026

By Shubhangi Bhatia

What?

India’s electric car story in 2025 delivered record year-on-year sales, new global entrants and rising investments in charging—but it also exposed the fragility of the transition. While volumes hit new highs, momentum slowed after policy shifts, especially GST cuts on internal-combustion engine (ICE) vehicles, which pulled mass-market buyers back to petrol models. Two-wheeler EV sales also cooled after years of rapid growth.

Even the luxury car segment was not immune. Santosh Iyer, managing director and chief executive officer of Mercedes-Benz India, says that despite operating at the top end of the market, the company has seen entry-level EV demand soften.

Despite EV penetration in passenger vehicles doubling to 3.8% and registrations crossing 2 million units, India’s electrification drive remains heavily reliant on policy support, affordability and ecosystem readiness rather than pure consumer pull.

Why?

GST cuts on ICE vehicles, rising hybrid adoption, uneven state-level policies have diluted the price advantage of EVs. Persistent challenges—range anxiety, patchy charging infrastructure, resale-value uncertainty, financing constraints and high repair costs—continue to deter mass buyers.

At the heart of the slowdown is a widening gap between ambition and execution. India’s policy roadmap targets 30% EV penetration in private cars and 80% in two- and three-wheelers by 2030. Yet analysis by the International Council on Clean Transportation suggests draft CAFE-III norms could deliver just 10–11% EV sales by decade-end, with automakers projecting closer to 20%.

Why Does This Matter?

“The year 2026 will mark the advent of multiple gigafactories entering production, taking total capacity to 100 GWh from the current 60 GWh,” says Rajat Mahajan, partner and automotive sector leader at Deloitte India.

The building blocks for scale appear to be falling into place—declining battery prices, expanding gigafactory capacity, deeper localisation and growing global interest. Yet without firm, consistent regulation that clearly tilts demand away from internal-combustion vehicles, adoption risks oscillating between short-lived spurts and prolonged slowdowns. The industry, too, remains divided, with hybrids increasingly pitched as an ‘interim’ solution, fragmenting long-term strategy.

India’s EV transition is nearing a decisive moment as it heads into next year. The question remains: will 2026 be the year India decisively moves beyond early adopters—or will it expose the limits of the country’s EV push?

US Courts Nuclear

The US has signalled readiness to participate in India’s nuclear energy sector, days after Parliament passed a law opening the industry to private investors and limiting liability. The US embassy said Washington stands ready to pursue joint innovation and research in the energy sector.

Context: Last week, India dismantled its decades-old state monopoly in nuclear power generation and overhauled liability provisions that had deterred investment. The changes are expected to get proposals from groups such as Adani under consideration.

Setting: A 2008 India-US civil nuclear deal had enabled access to atomic technology, but a 2010 liability law exposed suppliers to damage claims, stalling growth. The new legislation shields suppliers, caps operator liability and allows a government-backed fund, potentially reviving the sector and supporting India’s 2047 development ambitions.

IndiGo Under Antitrust Lens

The Competition Commission of India (CCI) has sought detailed information from IndiGo as part of a preliminary probe into alleged abuse of dominance following December’s flight disruptions. The inquiry is examining whether capacity constraints during cancellations translated into exploitative pricing, after a consumer flagged fares rising to 2.5 times original levels. The CCI is assessing the issue from the standpoint of wider consumer harm under Section 4 of the Competition Act, while excluding flight duty time limitations, which fall under the DGCA’s remit, Business Standard reported.

Pivot: The case marks a shift from operational lapses to competition scrutiny, signalling that pricing behaviour during disruptions—not just safety or scheduling failures—can attract antitrust oversight.

Backstory: IndiGo cancelled over 4,200 flights between December 1 and 9. On December 20, it planned 2,280 flights (1,962 domestic, 318 international) with 45 aircraft grounded, elevated pilot leave, and heavy reliance on standby crews, before the DGCA ordered a 10% winter capacity cut.

Murugappa Dealings Draw Scrutiny

A Cobrapost investigation has flagged transactions exceeding Rs 10,000 crore involving Cholamandalam Investment & Finance Company Ltd. (CIFCL) and a web of Murugappa Group entities, family members and senior executives, based on statutory filings and corporate disclosures. The probe also points to cash deposits of more than Rs 25,000 crore made by CIFCL across 14 banks over the past six years, figures that Cobrapost says warrant closer regulatory scrutiny.

Overview: The analysis alleges large-scale related-party transactions routed through entities such as Chola Business Services and Murugappa Management Services, including payments to family members and top management running into hundreds of crores.

Setup: Cobrapost said the practices raise serious questions over compliance with the Companies Act, SEBI’s LODR norms, IRDAI guidelines and accounting standards, especially given CIFCL’s heavy reliance on public and institutional borrowings.

Viksit Bharat, Studying Elsewhere

India sent about 1.33 million students abroad in 2024, with Canada, the US, the UK, Australia and Germany emerging as the top destinations, according to a new report by NITI Aayog. Latvia recorded the highest share of its foreign students from India.  

Flashpoint: The report also showed that outbound mobility far outstripped inbound enrolments, with foreign students in India remaining below 60,000.

Next Steps: NITI Aayog CEO BVR Subrahmanyam said India must “systematically internationalise” its universities to reverse the imbalance. The report recommends easing regulations for foreign universities, allowing “campus-within-campus” models, expanding joint and dual degree programmes, and improving visa and scholarship regimes for inbound students.

✍️ Zinal Dedhia, Kudrat Wadhwa, Shubhangi Bhatia, Katya Naidu | ✂️ Rohini Chatterji | 🎧 Joshua Thomas

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