NITI Aayog recommends extending subsidies, incentives till 2031

India's push to accelerate the adoption of electric two-wheelers will get bogged down unless subsidies and incentives are extended till 2031, according to a report by government thinktank NITI Aayog.

The report says if the incentives continue for the next 7-8 years, range and power of these vehicles could go up by 20 percent, battery might come down by 8 percent (compounded) and penetration may exceed 100 percent with 2.2 crore units selling in India.

The recent spate of electric vehicles catching fire has somewhat affected the demand for electric two-wheelers, though a national automobile federation doesn't think the subdued demand will last for long.

Recent data by VAHAN, the national register for e-services, showed that the registrations of electric two-wheelers went down by 20 percent to 39,339 in May compared to April.

However, Vinkesh Gulati, President, Federation of Automobile Dealers Associations (FADA), feels the demand will bounce back in a couple of months. “EV enquiry levels have been going down,” Gulati said during an interview with CNBC-TV18. “You will see a subdued retail happening for at least a month or two, but this phenomenon will not continue for long," he said.

CNBC-TV18 had reported in May that several EV companies were likely using lower quality cells despite submitting A-grade cells for testing, taking advantage of the loosely-framed rules in the absence of surprise checks.

Following reports of defects in cells and batteries, the government is in the process of coming up with stricter standards for EVs.

Earlier, Bajaj Auto CEO Rajiv Bajaj said he believes that a lot of electric vehicle makers "should not be manufacturing EVs" but not enough has been done to stop them from being in the business.

"There is still a lot of makers out there that I believe should not be making electric vehicles. I don't think enough is being done to put a lid on this as quickly as it should be because I can't put it more simply than this that they are playing with people's lives and that's just not right," Bajaj had said in an interview with CNBC-TV18.