India’s electric vehicle (EV) market is expected to see strong adoption during FY2027, with EV penetration projected to grow to 10-12% of total vehicle sales during FY2026, up from 8.5% in FY2026, according to a new report by India Ratings & Research (Ind-Ra).
The rating agency expects growth to remain concentrated in vehicle segments where electrification already offers clear economic benefits, particularly electric two-wheelers and three-wheelers.
According to the report, electric two-wheelers (e-2W) 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, convenience of home charging and expanded 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 estimates penetration to grow from 59% in FY2026 to 62-65% in FY2027, supported by favorable operating economics for commercial users and continued government policy support.
In comparison, electrification in long-distance mobility segments is likely to proceed at a slower pace. The report said high upfront vehicle costs, availability of charging infrastructure and driving range considerations continue to influence consumer purchase decisions.
Despite these challenges, electric passenger vehicles (e-PV) are expected to register healthy growth from a relatively small base. Ind-Ra estimates EV penetration in the passenger vehicle segment to grow to 6-8% in FY2027 from 4.4% in FY2026, aided by the launch of new electric models. Adoption is expected to be strongest in metropolitan cities and among high-income buyers.
The report also forecasts growth in the electric bus segment, with penetration expected to grow from 4.37% in FY2026 to 6-8% in FY2027. Growth is likely to be supported by healthy order pipelines and government procurement initiatives, although deployment will depend on charging infrastructure and operational readiness at state transport undertakings.
Commenting on the Outlook, Shruti Sabu, Director – Corporates at India Ratings & Research (Ind-Ra) said India’s EV market continues to demonstrate strong growth potential, supported by improving ownership economics, a wide range of vehicle options and growing consumer acceptance. He said the next phase of growth will depend on developing a strong domestic EV value chain, reducing dependence on imports, strengthening local manufacturing capabilities for batteries and other critical components, and expanding the country’s charging infrastructure.