“India’s Electric Two-Wheeler Growth Forecasted to Surge 16-18% as Rare-Earth Supply Eases, Says Crisil Ratings”

The anticipated easing of rare-earth supply is poised to significantly enhance the growth trajectory of electric two-wheelers (E2Ws) in India, projecting an increase of 16-18 percent in the upcoming fiscal year. This marks a notable recovery from the current fiscal year, where growth has been tempered to approximately 12-13 percent due to ongoing supply chain constraints, as outlined in a report by Crisil Ratings. The current fiscal year’s moderation in E2W growth can be attributed to temporary disruptions in the supply of essential rare-earth magnets, compounded by the recent rationalization of the goods and services tax (GST) on internal combustion engine (ICE) vehicles. In the previous fiscal year, E2W volume growth reached a robust 22 percent, illustrating the sector’s potential amidst challenges. Anuj Sethi, Senior Director at Crisil Ratings, emphasized that the supply disruptions stemming from a shortage of rare-earth magnets significantly impacted E2W volumes around the middle of the year. However, as supply conditions began to improve, coinciding with the GST-led price adjustments in ICE models, original equipment manufacturers (OEMs) responded strategically by offering discounts and launching more affordable electric models. This approach has been instrumental in bridging the price gap between ICE and electric vehicles, fostering a recovery in E2W volumes. The increasing availability of rare-earth materials is expected to play a crucial role in driving innovation and affordability within the electric two-wheeler market in India, aligning with the government’s push for sustainable transportation solutions. As manufacturers ramp up production to meet the growing demand for electric mobility, the focus on establishing robust supply chains for critical components like rare-earth magnets will be pivotal. The shift towards electric two-wheelers is becoming increasingly important in India’s broader efforts to reduce carbon emissions and embrace renewable energy sources. With an expanding consumer base recognizing the environmental benefits of electric vehicles, the outlook for the E2W market remains optimistic. In conclusion, as the rare-earth supply issues ease and GST adjustments continue to favor electric models, the Indian electric two-wheeler market is expected to experience a significant resurgence, paving the way for a new era of growth in the electric mobility sector. The transition to electric two-wheelers not only aligns with global sustainability trends but also positions India as a leader in the green transportation revolution, making it an essential area of focus for investors and policymakers alike.