Union Budget 2026: Powering India's Next Phase of EV Two-Wheeler Growth

This article is authored by Mohal Lalbhai, Founder and Group CEO, Matter Motor Works Pvt. Ltd.India’s two-wheeler market keeps 137 million people moving every day. It is the backbone of daily mobility. Data from TechUp 3.0, drawn from 137,787 Aera rides covering 2.1 million kilometres, shows that electric two-wheelers are no longer experimental. They deliver 0–60 acceleration in 4.2 seconds, a real-world range of 182 km, and savings of nearly ₹65,000 a year for every rider.Union Budget 2026 has the opportunity to turn this proven engineering reality into long-term manufacturing leadership.One of the most immediate expectations from the Budget is the continuation of PM E-DRIVE incentives at meaningful levels for electric motorbikes. Parity with other EV segments is essential to maintain consumer confidence. Incentives work when they are predictable. India has already seen this play out. When policies remain stable, demand builds steadily.For consumers, the question is simple. Will electric motorcycles continue to offer value as the category scales? Policy continuity is what keeps that answer clear.There is also a need to reassess the ₹1.5 lakh ex-factory price cap under PM E-DRIVE. Material costs have risen, and expectations around performance, safety, and durability have evolved. The current cap unintentionally penalises high-quality, made-in-India electric motorbikes that invest in better engineering. If the goal is long-term adoption, policy must reward innovation and quality, not restrict it.India’s manufacturing push now needs its next upgrade. A more inclusive PLI 2.0 framework that supports startups and innovation-led OEMs would make a real difference. Startups are where new vehicle architectures, faster engineering cycles, and breakthrough systems are being developed, from geared electric drivetrains to liquid-cooled thermal management.Global competitiveness in EVs will not come from scale alone. It depends equally on product depth and engineering originality. Strengthening component localisation and supplier capabilities is critical to building a resilient and self-reliant EV ecosystem.If India wants to be more than a manufacturing base and emerge as a true global EV hub, R&D has to move to the centre of Budget thinking. Structured incentives, grants, and long-term programs can encourage companies to invest in deep technology development rather than short-term optimisation.The next phase of mobility will be defined by software and intelligence. EVs are already far more digital than internal combustion vehicles. We are now moving into an era of AI-defined vehicles, where intelligence is embedded into how vehicles are designed, operated, and improved over their lifetime.AI-defined vehicles allow continuous software upgrades, smarter energy management, improved safety outcomes, and better adaptation to real-world riding conditions. They learn from terrain, traffic patterns, and rider behaviour, improving reliability and reducing ownership costs over time.This is particularly relevant in India, where riding conditions are unpredictable and rarely resemble test environments. TechUp 3.0 data shows that by the second month of ownership, riders improve range by nearly 25 percent simply by refining technique through regenerative braking, smoother acceleration, and disciplined riding modes. Software-led learning directly translates into better performance on Indian roads.R&D support should also extend to rare earth-free motor technologies. Global dependence on rare earth magnets remains a strategic vulnerability. Alternatives such as iron nitride-based magnets offer a path toward lower import dependence and greater cost stability for EV manufacturers.Targeted investment across AI, advanced electronics, and rare earth-free technologies would place India in a position of global leadership rather than catch-up.Charging infrastructure remains one of the biggest enablers of wider EV adoption. Budget 2026 should accelerate charging deployment, especially in Tier II and Tier III cities. For electric two-wheelers, visibility and reliability of charging matter as much as raw range. Expanding infrastructure, alongside grid readiness and supportive regulations, will reduce range anxiety and unlock broader geographic adoption.India has the opportunity to lead the world in electric two-wheeler mobility. Sustained demand-side incentives under PM E-DRIVE, realistic pricing thresholds, an inclusive PLI framework, and stronger R&D support for AI-defined vehicles can shape the next phase of growth.With the right policy choices, electric two-wheelers can become India’s most successful clean mobility story. One that benefits consumers, strengthens domestic manufacturing, creates skilled jobs, improves air quality, and contributes meaningfully to the vision of Viksit Bharat 2047, built in India, for the world.Disclaimer: Views and opinions expressed in this article are solely those of the original author and do not represent any of The Times Group or its employees.