India’s electric vehicle (EV) market is expected to witness stronger adoption during FY2027, with EV penetration projected to increase to 10-12% of total vehicle sales, up from 8.5% in FY2026, according to a new report by India Ratings and Research (Ind-Ra).
The ratings agency expects growth to remain concentrated in vehicle segments where electrification already offers clear economic advantages, particularly electric two-wheelers and three-wheelers.
According to the report, electric two-wheelers (e-2Ws) are expected to account for 8-10% of total two-wheeler sales in FY2027, compared to 6.6% in the previous financial year. The anticipated growth is being driven by lower running costs, the convenience of home charging, and an expanding range of products from established automotive manufacturers.
The electric three-wheeler (e-3W) segment is expected to remain India’s most electrified vehicle category. Ind-Ra forecasts penetration to rise to 62-65% in FY2027 from 59% in FY2026, supported by favourable operating economics for commercial users and continued government policy support.
In comparison, electrification in long-distance mobility segments is likely to progress at a slower pace. The report notes that higher upfront vehicle costs, charging infrastructure availability and driving range considerations continue to influence consumer purchasing decisions.
Despite these challenges, electric passenger vehicles (e-PVs) are expected to register healthy growth from a relatively small base. Ind-Ra estimates EV penetration in the passenger vehicle segment will increase to 6-8% in FY2027, compared to 4.4% in FY2026, aided by the launch of new electric models. Adoption is expected to remain strongest in metropolitan cities and among higher-income buyers.
The report also projects growth in the electric bus segment, with penetration expected to increase to 6-8% in FY2027 from 4.37% in FY2026. Growth is likely to be supported by healthy order pipelines and government procurement initiatives, although deployment will continue to depend on charging infrastructure and operational readiness across state transport undertakings.
Commenting on the outlook, Shruti Saboo, Director – Corporates at India Ratings and Research (Ind-Ra), said India’s EV market continues to demonstrate strong growth potential, supported by improving ownership economics, a broader range of vehicle options and increasing consumer acceptance. She added that the next phase of growth will depend on developing a stronger domestic EV value chain, reducing reliance on imports, strengthening local manufacturing capabilities for batteries and other critical components, and expanding the country’s charging infrastructure.
