Even though the urban population of India is rising, the overall disposable income of cities isn’t, as most of the people are coming in from rural areas, therefore are plagued by perpetually precarious finances. As a result, the demand for cost-effective commuting options, especially for short distances, has perpetually been high in the cities and increasing still. This is why electric rickshaws (e-rickshaws) have become so popular in the last 5–6 years. For every km, a person has to merely pay INR 10, at which rate, the e-rickshaw driver earns INR 50 for traveling just 1 km.

Therefore, due to the cost benefits of such vehicles for commuters, as well as drivers/owners, the Indian electric rickshaw market revenue is projected to grow from $786.2 million in 2019 to $1,394.2 million by 2025, at a robust 33.3% CAGR during 2020–2025. As per P&S Intelligence, another reason behind the increasing sale of such vehicles is the government support. Because electric vehicles (EVs) are costlier than their conventional counterparts, the government is offering strong support in the form of purchase subsidies, tax rebates, and reduction in the registration and licensing fees, to encourage their adoption.

The FAME India scheme implemented in 2015 was renewed in 2019 with an investment of $1,423 million (INR 10,000 crore). Of this, $365 million (INR 2,500 crore) will be spent on offering incentives on the purchase of 500,000 e-rickshaws. Electric rickshaws with a maximum battery capacity of 5 kilowatt-hours (kWh) and en ex-factory price of up to $7,300 (INR 500,000)will be supported with an incentive of $730 (INR 50,000) for every unit.

These vehicles are available with motor power of less than 1,000, 1,000–1,500, and more than 1,500 W. Of these, 1,000–1,500-W variants are the most popular, as the e-rickshaw niche in the country has been dominated by small, local players till now, owing to the lack of government regulations. But, recently, the government implemented the Goods and Services Tax (GST) and regulations regarding the eco-friendliness and operational safety of such vehicles. As a result, unorganized companies are finding it increasingly difficult to produce and sell e-rickshaws in the country.

Their loss, however, is established companies’ gain, as since the implementation of safety and regulations regarding such vehicles and the GST, established three-wheeler manufacturers have started flooding the country with better and higher-power models. As a result and coupled with the rising demand for higher-speed electric rickshaws, the sale of those with motor power of more than 1,500 W is set to grow rapidly in the coming years. For instance, Mahindra & Mahindra Ltd. introduced the e-Alfa Mini passenger carrier e-rickshaw in September 2017, which has a motor rated at 1.56 kW (1,560 W) power.

Presently, Delhi is the most-prosperous region for Indian electric rickshaw market players. These vehicles first appeared in the city in 2012, and by 2016, there were over 100,000 of them on the roads. A key reason behind this urge has been the subsidy of INR 30,000 that the Delhi government has been offering on them. Moreover, in 2017, Delhi Metro Rail Corporation (DMRC) formally introduced these vehicles at stations, where their numbers are continuously swelling. Further, in February 2021, the Delhi government decided to replace its compressed natural gas (CNG) auto-rickshaws with electric variants.

Hence, with the continuous government support and rising need for first- and last-mile transportation in cities, the demand for electric rickshaws will keep rising in the country.