The Flip Side Of Rising Fuel Prices

Fuel Shock Sparks India's Fastest Electric Vehicle Revolution Yet

By Govindraj Ethiraj

Four decades ago, India’s two-wheeler market became a battlefield for four Japanese automotive giants, each seeking to capture the mobility of a nascent middle class.

While Suzuki, Yamaha, and Kawasaki placed their bets on the youthful allure of performance and the raw power of two-stroke engines, Hero Honda of the Munjal Group chose a quieter, more utilitarian path.

In 1985, Hero launched the CD 100, a modest motorcycle equipped with a four-stroke engine.

What it lacked in speed, it made up for in an engineering metric that matters more than horsepower to the subcontinental consumer: thrift.

Backed by a brilliantly bold advertising campaign — headlined by the iconic mantra, "Fill it, Shut it, Forget it" — the bike promised an unprecedented 80 kilometers per liter.

The phrase quickly permeated the national lexicon, used millions of times even in entirely non-motorcycling contexts.

As automotive journalist Srinivas Krishnan, former Editor of Business Standard Motoring and columnist with AutoX, pointed out to me, Hero deliberately went for pure efficiency at a time when its rivals were chasing youthfulness and power — traits that fuel-thirsty two-stroke engines excelled at delivering.

The four-stroke CD 100 was subdued, but it was highly economical.

The Return Of The Mileage Metric

Today, history is repeating itself and macroeconomic shocks are forcing drivers to prioritise efficiency.

Three whole months after the onset of the war in West Asia, with fuel prices having risen and poised to climb further, the focus is back on fuel economy.

The difference today is that innovation is no longer focused on squeezing an extra kilometer out of the internal combustion engine; instead, the market is leaning heavily into electric, hybrid or alternative fuels.

For the last few years, electric vehicles (EVs) in India have grown rapidly but lagged behind Western and Chinese adoption curves.

The last few months, however, have sharply altered consumer perceptions.

The shift is visible on the ground.

Just last week, my driver told me that at least three new electric cars of varying shapes and sizes had been purchased within our sprawling, multi-tower residential complex in Mumbai.

This anecdotal surge appears to be backed up by corporate data.

Shailesh Chandra, Managing Director of Tata Motors Passenger Vehicles told Autocar Professional magazine last week that while EVs historically accounted for roughly 15% to 16% of the company's current sales mix, forward bookings have suddenly climbed to nearly 23%.

This suggests that demand is running significantly ahead of available production capacity.

According to Chandra, the recent spike in fuel prices has dramatically accelerated the consumer migration toward alternative powertrains.

"In the last two months, the jump has been two to two-and-a-half times of what it used to be," he noted, adding, "In the last 15 days, things have changed completely. It is an even sharper growth."

To address this wave of demand, Tata Motors is actively working to raise EV production by around 50%, aiming to scale monthly output from roughly 10,000 units to 15,000 units over the next few months.

Autocar Professional reports that other carmakers with growing EV portfolios, such as JSW MG Motor and Mahindra & Mahindra, are experiencing a similar demand surge.

The Power Of Price Signals

This rapid consumer migration underscores a fundamental truth about the Indian market: the extreme value-consciousness of its buyers.

Electric vehicles are proving to be a boon for a country searching for affordable mobility and their success has come despite relatively weak public charging infrastructure.

When economic incentives align, Indian consumers evidently bypass infrastructural inconveniences.

As Krishnan quipped, whether someone is buying a top-end luxury Mercedes-Benz or a simple two-wheeler, the unifying question remains exactly the same: "Kitna deti hai?" — How much mileage does it give?

This shift also offers a profound lesson in the efficacy of raw price signals.

India delayed raising retail prices for petrol and diesel by at least two months.

Once those higher prices finally hit the pumps, they acted as an immediate, unvarnished incentive for customers to shift or consider moving to more eco-friendly fuels, including electric, a transition that obviously bodes well for the wider economy.

It may even force internal combustion engine manufacturers to look for new efficiencies, though it remains unclear how much more mileage can realistically be extracted from traditional fossil-fuel setups.

Crises also have a remarkable track record of sweeping away institutional inertia.

High fuel prices will undoubtedly accelerate further innovation, accelerating the domestic supply chains for batteries and hybrid tech.

When a crisis alters consumer behavior this sharply, it forces capital to allocate more efficiently.

Forty years after its debut, Hero still sells the CD 100 platform as the improved Hero Splendor, operating on almost identical engineering specifications.

There has been no turning back from the point the four-stroke engine transformed India from a nation of casual commuters into a global two-wheeler manufacturing powerhouse.

Today, the price signals sent by expensive fossil fuels are doing something similar for the EV ecosystem.

For India's economy, nudging drivers to "fill it, shut it, and forget it" with an electrical cord rather than a fuel pump isn't just an environmental victory—it is a renewed textbook example of capitalist adaptation at its finest.

Following our session last month on “Navigating Market Risk in 2026,” we’re back to tackle another big debate — “Navigating Market Risk: Tracking New Opportunities”

Indian investors have benefited from a strong home-market story for many years. But with volatility rising, currencies moving, and global markets shifting, the question now is how portfolios should balance risk across asset classes, markets, and regions.

Join us on June 2 for our next closed-door session featuring Navneet Munot, MD & CEO, HDFC AMC, and Radhika Gupta, MD & CEO, Edelweiss Mutual Fund.

This is an invite-only session with a limited number of seats.

Rs 1.54 lakh crore

That's how much market capitalisation seven of India's 10 most-valued companies lost last week as benchmark indices ended lower in a holiday-shortened trading week.

Origin: Analysts say investors remained cautious amid global uncertainty, fluctuating crude oil prices, and concerns around foreign fund flows.

Top laggards:

• Reliance Industries: Lost Rs 46,078 crore in market value

• HDFC Bank: Lost Rs 33,333 crore

• Bharti Airtel: Lost Rs 25,409 crore

Top gainers:

• State Bank of India: Added Rs 15,036 crore in market value

• Larsen & Toubro: Added Rs 8,214 crore

• Life Insurance Corporation of India (LIC): Added Rs 2,387 crore

Analysts added that they expect markets to remain volatile in the near term as traders track macroeconomic data, central bank commentary, crude oil prices, and foreign investor activity.

India's Air Traffic Dips

India's domestic air traffic fell 3.47% year-on-year to 1.38 crore passengers in April, dragged down by softer travel demand and rising fuel costs following the Iran war, data from aviation regulator DGCA showed. The decline was steeper, 4.2%, compared with March, when carriers flew 1.44 crore passengers.

Overview: IndiGo strengthened its dominance, with market share rising to 65% from 63.3% in March, while the Air India Group slipped to 24.7% from 26.2%. Akasa Air edged up to 5.8% as SpiceJet continued to lose ground, falling to 3.4%.

Setup: On punctuality, IndiGo led with an on-time performance of 88.5%, followed by Air India Group at 82.4% and Akasa Air at 81.4%. SpiceJet lagged significantly at 31.2%.

FPIs Keep Exiting

Foreign portfolio investors (FPIs) continued to pull money out of Indian equities in May, withdrawing Rs 32,963 crore amid concerns over weak earnings growth, a depreciating rupee, and better opportunities in overseas markets. 

The Lead: With the latest sell-off, total FPI outflows from Indian equities have reached roughly Rs 2.25 trillion in 2026, already exceeding the Rs 1.66 trillion withdrawn during all of 2025.

Setup: Analysts say sustained foreign selling, elevated crude oil prices, and global macroeconomic uncertainty have weakened investor sentiment. A stronger dollar and rising yields in developed markets have also reduced the appeal of emerging markets such as India. Some market experts also point to continued global enthusiasm for artificial intelligence-linked stocks, which has diverted a portion of capital away from markets seen as lagging in the AI race. Investors now await signals on interest rates, oil prices, and foreign fund flows for clues on market direction.

Drug Price Caps

India’s drug pricing regulator has fixed retail prices for 30 drug formulations, including Vitamin D3 and calcium supplements, in a move aimed at keeping medicines affordable.

Fast Facts: The National Pharmaceutical Pricing Authority (NPPA) issued separate notifications setting maximum retail prices for the formulations under the Drugs (Prices Control) Order, 2013. Manufacturers cannot sell these products above the notified prices, excluding GST.

The Turning Point: The move forms part of the government’s broader effort to control medicine prices and reduce out-of-pocket healthcare spending. India already caps prices for hundreds of medicines under the National List of Essential Medicines, while the NPPA regularly fixes prices for newly approved formulations. The government says price controls improve access to treatment, while pharmaceutical companies argue that tighter regulation could pressure margins and discourage investment.