Ujaas Energy Ltd Management Discussions

Economy Overview

The World Economic Outlook (WEO) is a survey of prospects and policies by the IMF staff, usually published twice a year, with updates in between. It presents analyses and projections of the world economy in the near and medium term, which are integral elements of the IMFs surveillance of economic developments and policies in its member countries and of the global economic system. They consider issues affecting advanced, emerging and developing economies, and address topics of pressing current interest.

Global Growth: Divergent and Uncertain & Global Economy in the Shadow of War

Global growth is projected at 3.3 percent for 2026 and 3.2 percent for 2027, revised slightly up since the October 2025 World Economic Outlook. Technology investment, fiscal and monetary support, accommodative financial conditions, and private sector adaptability offset trade policy shifts. Global inflation is expected to fall, but US inflation will return to target more gradually. Key downside risks are reevaluation of technology expectations and escalation of geopolitical tensions. Policymakers should restore fiscal buffers, preserve price and financial stability, reduce uncertainty, and implement structural reforms.

World Economic Outlook Growth Projections

	PROJECTIONS
(Real GDP, annual percent change)	2025	2026	2027
	3.4	3.1	3.2
	1.9	1.8	1.7
United States	2.1	2.3	2.1
Euro Area	1.4	1.1	1.2
Germany	0.2	0.8	1.2
France	0.9	0.9	0.9
Italy	0.5	0.5	0.5
Spain	2.8	2.1	1.8
Japan	1.2	0.7	0.6
United Kingdom	1.3	0.8	1.3
Canada	1.7	1.5	1.9
Other Advanced Economies	3.0	2.6	2.2
	4.4	3.9	4.2
Emerging and Developing Asia	5.5	4.9	4.8
China	5.5	4.4	4.0
India	7.6	6.5	6.5
Emerging and Developing Europe	2.0	2.0	2.1
Russia	1.0	1.1	1.1
Latin America and the Caribbean	2.4	2.3	2.7
Brazil	2.3	1.9	2.0
Mexico	0.6	1.6	2.2
Middle East and Central Asia	3.6	1.9	4.6
Saudi Arabia	4.5	3.1	4.5
Sub-Saharan Africa	4.5	4.3	4.4
Nigeria	4.0	4.1	4.3
South Africa	1.1	1.0	1.3
Memorandum
Emerging Market and Middle-Income Economies	4,4	3.8	4.1
Low-Income Developing Countries	4.8	4.8	4.9

Global Growth Outlook

After withstanding higher trade barriers and elevated uncertainty last year, global activity now faces a major test from the outbreak of war in the Middle East. Assuming that the conflict remains limited in duration and scope, global growth is projected to slow to 3.1 percent in 2026 and 3.2 percent in 2027. Global headline inflation is projected to rise modestly in 2026 before resuming its decline in 2027. Slowdown in growth and increase in inflation are expected to be particularly pronounced in emerging market and developing economies. Downside risks dominate the outlook. A longer or broader conflict, worsening geopolitical fragmentation, a reassessment of expectations surrounding artificial intelligence driven productivity, or renewed trade tensions could significantly weaken growth and destabilize financial markets. Elevated public debt and eroding institutional credibility further heighten vulnerabilities. At the same time, activity could be lifted if productivity gains from AI materialize more rapidly or trade tensions ease on a sustained basis. Fostering adaptability, maintaining credible policy frameworks, and reinforcing international cooperation are essential to navigating the current shock while preparing for future disruptions in an increasingly uncertain global environment.

Impact of US Tariffs & Tax and tariff disruptions reshape supply chains as strategic engines:

Supply chains are evolving from operational backbones to strategic growth enablers for organizations, though they remain underleveraged and struggle for recognition at the executive level, a report by PwC India said. The survey highlighted that recent developments in the trade and tariff landscape represent both a stress test and a strategic inflection point for supply chains. "Geopolitical uncertainty and shifting tariffs are driving a need for adaptive and compliant supply chains While short-term disruptions are inevitable, they also offer a critical opportunity to assess value chains and incorporate greater agility, sustainability, and foresight," the PwC survey said.

The PwC report provides an eight-step framework for global trade strategy, centered on diversification, localization, and digital trade intelligence, which companies can leverage to thrive despite tariff and taxation pressures.

The PwC report noted that although AI and generative AI (GenAI) have the potential to revolutionize supply chains, only 13 per cent of organizations have implemented AI use cases that deliver tangible value. For GenAI, the figure is just 1 per cent. Companies are primarily using AI to monitor supply chain risks and manage stakeholder communication.

The survey also highlighted the growing adoption of digital twin technology — creating virtual replicas of physical supply chains to visualize "what-if" scenarios — with 58 per cent of business leaders planning to invest in it over the next one to two years.

Sources: https://www.business-standard.com/economy/ news/pwc-india-supply-chain-survey-trade-tariff-Indian Economy Overview

Indian Economic Outlook

Economic Environment

The Indian economy continued to demonstrate resilience and strong macroeconomic fundamentals during FY 2025-26, maintaining its position among the fastest-growing major economies in the world. Growth was supported by robust domestic demand, sustained government capital expenditure, expansion in the services sector, and improving manufacturing activity. Government initiatives aimed at infrastructure development, digital transformation, renewable energy, and industrial growth further strengthened the economic landscape. The services sector remained the primary driver of economic growth, while construction and manufacturing activities benefited from increased public investment and improving private sector participation. Rural demand showed signs of recovery, supported by stable agricultural output and higher government spending on rural development.

Inflation remained relatively contained compared to previous years, although fluctuations in global commodity prices and geopolitical developments continued to pose challenges. The financial sector remained stable, supported by a well-capitalized banking system and continued credit growth across key industries.

Global Economic Scenario

The global economy during FY 2025-26 continued to experience uncertainty arising from geopolitical tensions, supply chain disruptions, inflationary pressures, and varying monetary policies across major economies. Volatility in crude oil prices and slower global trade growth affected international business sentiment and investment decisions.

Despite these external challenges, Indias large domestic market, ongoing structural reforms, and strong investment pipeline enabled the economy to maintain a favorable growth trajectory relative to many other major economies.

Outlook for FY 2026-27

Looking ahead, the outlook for FY 2026-27 remains positive, although economic growth is expected to moderate from the exceptionally strong performance witnessed during the previous year. Indias growth is expected to continue to be driven by domestic consumption, infrastructure development, manufacturing expansion, and increasing investments in renewable energy and digital technologies.

Government initiatives under infrastructure development programs, energy transition policies, and production-linked incentive schemes are expected to support industrial growth and employment generation. The continued emphasis on clean energy and sustainability is likely to create significant opportunities across the power and renewable energy sectors.

Private consumption is expected to improve further, supported by stable inflation, rising income levels, and increased urban and rural economic activity. Financial sector stability and continued investment in logistics, transportation, and industrial infrastructure are also expected to contribute positively to overall economic performance.

Opportunities

The Company expects significant opportunities arising from:

Continued investment in renewable energy and solar power projects.

Expansion of power transmission and distribution infrastructure.

Government focus on energy security and sustainability.

Increased industrial and commercial demand for clean energy solutions.

Digitalization and technological advancements improving operational efficiency.

Risks and Challenges

Despite the positive outlook, certain risks may influence economic performance and business operations, including:

Volatility in global crude oil and commodity prices.

Geopolitical conflicts affecting international trade and supply chains.

Inflationary pressures impacting input costs and consumer demand.

Adverse weather conditions affecting agricultural output and rural consumption.

Global economic slowdown impacting exports and investment flows.

Conclusion

Indias long-term economic fundamentals remain strong, supported by favorable demographics, policy reforms, infrastructure investments, and increasing adoption of sustainable technologies. While global uncertainties may create short-term challenges, the medium- to long-term outlook for the Indian economy remains encouraging.

The Company remains confident that its strategic focus on operational excellence, renewable energy solutions, technological innovation, and prudent financial management will enable it to capitalize on emerging opportunities and create sustainable value for all stakeholders during FY 2026-27 and beyond.

Sources: https://economictimes.indiatimes.com/news/economy/ indicators/india-gdp-growth https://www.reuters.com/world/india/view-indias-economy-grows-78-january-march-2026-06-05/?utm_source=chatgpt.com

Indian Renewable Energy Sector: Milestones, Challenges and Outlook

Industry Overview

Indias renewable energy sector continued its remarkable growth trajectory during FY 2025-26, reinforcing the countrys position as one of the worlds leading clean energy markets. Driven by supportive government policies, increased private investment, technological advancements, and growing demand for sustainable energy, the sector achieved several historic milestones.

India has now emerged as the third-largest country globally in installed renewable energy capacity, reflecting its commitment towards energy transition and climate goals. The Governments long-term objective of achieving 500 GW of non-fossil fuel capacity by 2030 continues to drive significant investment across solar, wind, energy storage, and green hydrogen initiatives.

Key Milestones During FY 2025-26

FY 2025-26 witnessed the highest-ever annual renewable energy capacity additions in Indias history. The country added approximately 55 GW of non-fossil fuel capacity during the year, taking the total installed non-fossil fuel capacity to around 283 GW as of 31 March 2026.

Major achievements during the year include:

Record capacity addition in renewable energy, led primarily by solar and wind power.

India achieved its highest-ever annual solar capacity addition, reflecting continued momentum in utility-scale and rooftop solar projects. Wind power installations also recorded their highest annual addition, strengthening the diversification of the renewable energy portfolio.

Renewable energy contributed a record share of electricity demand during peak periods, demonstrating increasing integration of clean energy into the national grid.

Continued policy support through initiatives such as domestic manufacturing incentives, grid expansion, battery storage development, and the National Green Hydrogen Mission further enhanced investor confidence.

The sector also witnessed increasing participation from commercial and industrial consumers through open access mechanisms and captive renewable energy projects, supporting Indias transition towards cleaner and more sustainable power generation.

Growth Drivers

The growth of the renewable energy sector during FY 2025-26 was supported by several structural factors:

Strong government policy and regulatory support.

Continued investment in transmission infrastructure and grid modernization.

Declining cost of solar and energy storage technologies.

Increasing corporate commitments towards ESG and de carbonization.

Expansion of green financing and international investments.

Rising electricity demand from industrialization, urbanization, and digital infrastructure.

Challenges Faced During FY 2025-26

Despite significant progress, the renewable energy sector continued to face several operational and strategic challenges:

1. Grid Integration

The rapid addition of intermittent renewable capacity requires substantial investment in transmission networks, balancing infrastructure, and energy storage systems to maintain grid stability.

2. Land Acquisition and Approvals

Large-scale renewable energy projects continue to experience delays due to land acquisition complexities, environmental clearances, and permitting processes.

3. Supply Chain Constraints

Dependence on imported components, fluctuations in raw material prices, and global logistics disruptions affected project costs and execution timelines.

4. Energy Storage Requirements

As renewable penetration increases, battery energy storage and pumped hydro projects become essential for ensuring reliable round-the-clock power supply.

5. Financial Health of Distribution Companies

Delayed payments and financial stress among electricity distribution companies continue to impact project developers and overall sector liquidity.

Outlook for FY 2026-27

The outlook for FY 2026-27 remains highly positive. The renewable energy sector is expected to continue expanding, supported by strong policy initiatives, growing electricity demand, and increasing investment in clean technologies.

Key growth areas are expected to include:

Utility-scale solar power projects.

Rooftop solar installations across residential, commercial, and industrial segments.

Wind energy development, including hybrid projects.

Battery Energy Storage Systems (BESS). Green Hydrogen production and associated infrastructure. Renewable energy open access and corporate power purchase agreements. Modernization of transmission and smart grid infrastructure.

The Governments continued focus on domestic manufacturing under Production Linked Incentive (PLI) schemes and investments in transmission corridors is expected to improve supply chain resilience and accelerate project execution.

Key Sources for the Renewable Energy Section

1. Ministry of New and Renewable Energy

n Physical Progress Reports (installed renewable energy capacity)

Annual achievements and sector statistics

2. Government of India / Official announcements

India added a record 55.29 GW of non-fossil capacity during FY 2025-26.

Total non-fossil installed capacity reached approximately 283 GW as of 31 March 2026. India achieved 50% of cumulative installed electricity capacity from non-fossil sources ahead of its 2030 target.

3. Indias long-term energy target

Government target of 500 GW of non-fossil fuel-based installed capacity by 2030 under its climate commitments.

4. FY 2026-27 Outlook

The projection of continued growth in solar, wind, battery storage, and green hydrogen is based on: ongoing government policies, projects under implementation, transmission expansion, and industry trends rather than a single official forecast.

Source: Management analysis based on data and publications of the Ministry of New and Renewable Energy

Sources: https://mnre.gov.in/en/physical-progress/?utm_ source=chatgpt.comhttps://www.business-standard.com/industry/news/india-adds-record-55-29-gw-non-fossil-capacity-in-fy26-pralhad-joshi-126040801210_1. html?utm_source=chatgpt.com Conclusion

Indias renewable energy sector has entered a phase of accelerated growth and structural transformation. While challenges related to grid integration, financing, and infrastructure remain, the long-term fundamentals of the sector are robust.

With supportive government policies, increasing private sector participation, technological innovation, and strong sustainability commitments from industries, the renewable energy sector is expected to remain one of the key drivers of Indias economic growth and energy security during FY 2026-27 and beyond. The Company believes that these industry developments will create significant opportunities for sustainable business growth and long-term value creation for all stakeholders.

Green Energy Corridor Overview

In year 2012, a study was conducted by Power Grid Corporation of India Limited (PGCIL) wherein it was found that power evacuation and transmission infrastructure in near vicinities of potential sites was less and therefore, dedicated transmission infrastructure for large scale solar and wind power plants was planned. The Green Energy Corridor (GEC) report was submitted by PGCIL in September 2012. Based on PGCILs report, the states prepared their own transmission plans & submitted to Central Electricity Authority (CEA) for appraisal. The implementation work started in 2015, after due approval process. There are two schemes under the Green Energy Corridors: 1 - Intra-State GEC Phase-I

2 - Intra-State GEC Phase-II

Intra-State GEC Phase-I

The Intra-State Transmission System (InSTS) GEC-I scheme is being implemented by eight renewable rich States, namely Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu. The scheme is implemented by respective State Transmission Utilities (STUs).

The scheme is for setting up approx. 9700 ckm transmission lines and 22600 MVA substations in order to facilitate integration of approx. 24 GW of renewable generation capacity. The total project cost is Rs. 10141.68 crore with funding mechanism consisting of 40% Central Financial Assistance from MNRE (Rs. 4056.67 crores), 40% loan from KfW Germany (EUR 500 Million) and 20% Equity from STU.

Intra-State GEC Phase-II

The Intra-State Transmission System (InSTS) GEC-II scheme is being implemented by seven States, namely Gujarat, Himachal Pradesh, Karnataka, Kerala, Rajasthan Tamil Nadu, and Uttar Pradesh. The scheme is implemented by respective State Transmission Utilities (STUs).

The scheme is for setting up approx. 10750 ckm transmission lines and 27500 MVA substations in order to facilitate integration of approx. 20 GW of renewable generation capacity. The total project cost is Rs. 12031.33 crore with funding mechanism consisting of 33% Central Financial Assistance from MNRE (Rs. 3970.34 crores) and balance 67% to be arranged by STU. The balance 67% funds are also available as loan from IREDA/REC/PFC/KfW.

Sources: https://mnre.gov.in/en/green-energy-corridors/ Renewable Energy Market Outlook (FY 2026–27) FY 2026–27 Growth Drivers n Rapid expansion of solar power o Solar PV is expected to account for the majority of new renewable capacity additions globally. o Falling module costs and supportive government policies continue to accelerate deployment.

n Rising electricity demand o Electrification of transport, industry, and buildings, along with AI-driven data centers, is increasing power demand worldwide.

Energy security concerns o Many countries are investing in domestic renewable energy to reduce dependence on imported fossil fuels and improve energy resilience. Net-zero commitments o Government decarbonization targets and corporate ESG initiatives continue to drive renewable energy investments

Market Challenges

n Grid infrastructure and transmission constraints. Energy storage requirements to manage intermittent renewable generation. Project permitting and land acquisition delays. Supply chain risks and policy uncertainty in some regions The renewable energy sector is expected to maintain strong double-digit momentum, with solar and wind leading capacity additions. The International Energy Agency projects renewable generation to increase by roughly 8% annually through 2030, and renewables together with nuclear are expected to provide around half of global electricity generation by 2030

Annual Report Ready Statement

The global renewable energy market is projected to remain one of the fastest-growing sectors of the energy industry during FY 2026–27, with an estimated market size of approximately USD 2 trillion and sustained growth driven by large-scale solar and wind deployments, electrification trends, supportive government policies, and increasing corporate decarbonization commitments. Asia-Pacific is expected to remain the dominant market, while advancements in energy storage and grid modernization will further strengthen renewable energy adoption. Despite challenges such as transmission constraints and policy uncertainties, the long-term outlook for the sector remains highly positive.

Government initiatives he Ministry of New and Renewable Energy (MNRE) provides the national policy framework and financial support, while individual states implement their own renewable energy policies, incentives, and targets.

State	Major Initiative/ Policy	Key Target
Andhra Pradesh	Renewable Energy Export Policy 2020; Green Hydrogen & Green Ammonia Policy 2023	Facilitate 120 GW renewable projects and develop green hydrogen capacity
Gujarat	Renewable Energy Policy 2023	Targets around 36 GW solar and 143 GW wind capacity
Karnataka	Renewable Energy Policy 2022–2027	Add 10 GW of new renewable projects, including rooftop solar.
Madhya Pradesh	Renewable Energy Policy 2022	Achieve 30% renewable energy in the states energy mix by FY 2027 and develop 10,000 MW RE parks.
Maharashtra	Renewable Energy & Energy Storage Policy	Target to meet 65% of electricity demand from renewables by FY 2035–36 with major storage deployment.
Rajasthan	Biomass & Waste-to-Energy Policy 2023	Promote biomass and waste-to-energy projects alongside its large solar and wind base.
Tamil Nadu	Solar Energy Policy	Continued expansion of utility-scale and rooftop solar capacity.
Uttar Pradesh	Solar Energy Policy 2022	Target of 22,000 MW of solar power projects by 2026–27.
Uttarakhand	State Solar Policy 2023	Aim to achieve 2,500 MW cumulative solar capacity by 2027.
Jharkhand	State Solar Policy 2022	Deploy 4,000 MW of solar capacity by 2027.
Himachal Pradesh	Energy Policy 2021	Add 10,000 MW of green energy through hydro, solar, and other renewable sources by 2030.

https://mnre.gov.in/en/policies-and-regulations/ policies-and-guidelines/state Investments & Developments in Renewable Energy by Government & Private Sector (India – FY 2025–26 and Outlook for FY 2026–27)

1. Government Initiatives & Investments

Initiative	Recent Development
PM Surya Ghar: Muft Bijli Yojana	The Government is accelerating residential rooftop solar deployment, targeting 1 crore households by 2026–27. Over 26 lakh systems had been installed by March 2026, with about 17,968 crore disbursed as Central Financial Assistance.
Renewable Energy Capacity Addition	India added a record 44.5 GW of renewable energy capacity during 2025, nearly doubling additions from the previous year, with solar contributing the largest share.
Small Hydropower Programme	MNRE has issued operational guidelines backed by an outlay of 2,585 crore over five years to promote small hydropower projects up to 25 MW.
Defence Sector Renewable Projects	The Government approved a 250 MW solar project with Battery Energy Storage System (BESS) on defence land in Uttar Pradesh, demonstrating expansion of renewable energy into strategic infrastructure.
Manufacturing & Self-Reliance	Government support through Production Linked Incentive (PLI) schemes and domestic manufacturing policies has significantly expanded Indias solar manufacturing ecosystem.

2. Private Sector Investments & Developments

Company/Development	Investment/Progress
Avaada Group	Developing one of Indias largest integrated solar manufacturing facilities in Nagpur with an estimated investment of about 13,000 crore, including large- scale solar cell and module production.
Meta & CleanMax	Meta expanded its renewable energy partnership with CleanMax, increasing associated renewable capacity to over 900 MW to support its India operations.
Serentica Renewables (backed by KKR)	Plans to raise US$6–8 billion over five years as part of a broader investment program targeting approximately 17 GW of clean energy capacity.
ReNew Energy	Announced plans for approximately 82,000 crore of investment in green energy projects in Andhra Pradesh through multiple agreements with the state government.

3. Sector Developments

Indias installed renewable energy capacity reached approximately 215.5 GW (as of February 2026), reflecting strong long-term growth.

Renewable and other non-fossil sources account for over 50% of Indias installed power capacity, achieving a major national milestone ahead of the original 2030 timeline.

n Solar power remains the primary growth engine, while investments are increasingly flowing into battery energy storage, transmission infrastructure, and green hydrogen to support grid reliability and decarbonization.

Investments & Developments:

Indias renewable energy sector continued to witness significant investments from both the Government and the private sector during FY 2025–26. Government initiatives such as the PM Surya Ghar: Muft Bijli Yojana, support for domestic solar manufacturing, and new funding for small hydropower projects have accelerated the clean energy transition. Simultaneously, leading private developers have announced major investments in solar manufacturing, utility-scale renewable projects, energy storage, and transmission infrastructure. These developments strengthen Indias progress toward its target of 500 GW of non-fossil fuel capacity by 2030, while enhancing energy security, domestic manufacturing capabilities, and sustainable economic growth.

Sources: https://www.ibef.org/industry

Operation & Maintenance (O&M) and Transmission in the Renewable Energy Sector (India – FY 2026–27) 1. Operation & Maintenance (O&M) n Operation & Maintenance (O&M) is critical for maximizing the performance, reliability, and lifespan of renewable energy assets such as solar and wind power plants. Modern O&M practices focus on improving plant availability while reducing downtime and lifecycle costs.

Key Developments n Predictive and condition-based maintenance using

AI, IoT sensors, drones, and SCADA systems enables early fault detection and minimizes unexpected failures.

Drone-based thermography and module inspection are increasingly used for rapid identification of hot spots and defective panels.

Robotic cleaning systems help maintain solar module efficiency while reducing water consumption and labor requirements.

Remote monitoring and centralized control centers allow operators to monitor multiple renewable plants in real time.

Preventive maintenance programs improve plant availability, energy yield, and equipment life, thereby enhancing project economics.

2. Transmission Infrastructure

As renewable capacity grows, strengthening the transmission network is essential to evacuate power from resource-rich regions to demand centers.

Recent Developments n India is expected to invest approximately 1 lakh crore in the Inter-State Transmission System (ISTS) during FY 2026–27 and FY 2027–28 to support renewable energy integration.

The government is expanding Green Energy

Corridors and transmission infrastructure to facilitate evacuation of large-scale solar and wind projects.

Significant investments are also being made in high-voltage transmission lines, substations, and grid modernization to improve system reliability.

3. Key Challenges

Transmission expansion has not kept pace with renewable capacity additions in several regions. n Delays in land acquisition, right-of-way permissions, and environmental clearances can slow transmission projects.

Renewable-rich states such as Rajasthan and Gujarat face congestion because generation is increasing faster than evacuation infrastructure.

Battery Energy Storage Systems (BESS) and flexible grid management are becoming increasingly important to manage intermittency and reduce renewable energy curtailment.

Operation & Maintenance and Transmission:

Efficient Operation & Maintenance (O&M) practices are fundamental to ensuring high availability, reliability, and optimal performance of renewable energy assets. The adoption of digital technologies such as AI-based predictive maintenance, remote monitoring, drone inspections, and robotic cleaning systems is improving operational efficiency and reducing downtime. Simultaneously, the expansion of transmission infrastructure through Green Energy Corridors and substantial investments in the Inter-State

Transmission System is enabling greater integration of renewable power into the national grid. However, challenges including transmission bottlenecks, land acquisition issues, and the need for enhanced energy storage solutions remain critical areas requiring continued investment and policy support to sustain

Sources: https://arxiv.org/abs/2104.12561?utm_ source=chatgpt.com https://www.crisilratings.com/en/home/newsroom Indian Electric Two-Wheeler (2W EV) Industry Overview, FY 2025-26 Performance and FY 2026-27 Outlook Industry Overview International Energy Agency – Global EV Outlook 2026 n India remained the second-largest electric two-wheeler market globally.

Electric two-wheeler sales in India were approximately 1.3 million units in 2025, representing about 6% of total two-wheeler sales.

Ministry of Heavy Industries

n PM E-DRIVE Scheme and EV incentive policies supporting electric mobility.

Society of Indian Automobile Manufacturers

Industry sales statistics and market trends.

Federation of Automobile Dealers Associations

Monthly retail sales and EV registration data. Industry outlook is also supported by announced investments from leading manufacturers and capacity expansion plans across the sector.

Indias electric two-wheeler (E-2W) industry continues to be one of the fastest-growing segments of the automotive sector, supported by government initiatives promoting clean mobility, increasing fuel prices, technological advancements, and rising consumer awareness regarding sustainability. Electric scooters account for the majority of sales, driven by urban mobility needs and lower operating costs. India has emerged as the second-largest electric two-wheeler market globally, after China, demonstrating the countrys growing importance in the global EV ecosystem. The industry is witnessing increasing participation from established automobile manufacturers as well as dedicated EV companies, resulting in greater product innovation and improved charging infrastructure.

FY 2025-26 Industry Performance

During FY 2025-26, the Indian electric two-wheeler market continued its expansion despite a gradual reduction in purchase subsidies and stricter localization requirements under government incentive schemes.

Key highlights include:

India remained the worlds second-largest electric two-wheeler market.

Approximately 1.3 million electric two-wheelers were sold during 2025, representing about 6% of total domestic two-wheeler sales.

Growth was supported by increasing consumer acceptance, expansion of charging infrastructure, improved battery technology, and wider product availability. Established manufacturers significantly expanded their EV portfolios, increasing competition and improving product quality.

Fleet operators and commercial users increasingly adopted electric scooters due to lower lifecycle operating costs.

The industry also benefited from increasing investments in battery manufacturing, localization of components, and digital connectivity features integrated into modern electric vehicles.

Key Growth Drivers

The industrys growth during FY 2025-26 was driven by: Government policies promoting electric mobility.

Rising petrol prices and lower operating costs of EVs. Expansion of charging and battery-swapping infrastructure.

Improved battery technology and vehicle range. Growing environmental awareness among consumers. Increasing participation of major automotive manufacturers and private investors.

Challenges Faced During FY 2025-26

Despite strong growth prospects, the industry faced several challenges:

1. Reduction in Government Incentives

The transition from earlier incentive schemes to the PM E-DRIVE framework resulted in lower subsidies per vehicle and stricter localization requirements, affecting price competitiveness.

2. Supply Chain and Localization

Manufacturers continued efforts to localize battery cells and critical components while reducing dependence on imports, particularly from overseas suppliers.

3. Charging Infrastructure

Although charging infrastructure has expanded significantly, adequate coverage in semi-urban and rural areas remains a challenge.

4. Battery Raw Material Costs

Fluctuations in prices of lithium and other critical minerals continue to influence manufacturing costs and vehicle pricing.

5. Intensifying Competition

Competition among established automotive companies and new EV manufacturers has increased, leading to pricing pressure and higher investments in technology and distribution networks.

Outlook for FY 2026-27

The outlook for FY 2026-27 remains positive, supported by favourable long-term policy direction and growing consumer adoption. Industry growth is expected to continue, although the pace may moderate

Key growth drivers for FY 2026-27 include:

Continued expansion of electric scooter adoption in urban and semi-urban markets.

Increased investments in battery manufacturing and localization.

Growth of charging and battery-swapping infrastructure.

Development of affordable and higher-range electric vehicles.

Greater participation by corporate fleet operators and last-mile delivery services.

Ongoing government support for clean mobility and domestic manufacturing.

The industry is expected to witness continued technological innovation, improved economies of scale, and greater cost competitiveness, making electric two-wheelers an increasingly attractive alternative to conventional internal combustion engine vehicles.

Conclusion

Indias electric two-wheeler industry is transitioning from a policy-driven market to a technology- and consumer-driven growth story. While challenges related to infrastructure, localization, and pricing remain, the sectors long-term fundamentals are strong. With increasing investments, expanding manufacturing capabilities, and supportive government initiatives, the Indian E-2W industry is expected to play a significant role in achieving the countrys sustainable mobility and energy transition objectives during FY 2026-27 and beyond.