A spark to drive India’s e-LCV transition

Whenever your online orders are delivered, there is a good chance that they travelled in a light commercial vehicle (LCV) — those small (sub-3.5 tonne) trucks that are the backbone of India’s booming e-commerce economy. Here is a fact: while India has spent years regulating passenger car energy consumption, LCVs have operated in a regulatory blind spot. India has made significant strides in regulating fuel efficiency for passenger cars through corporate average fuel efficiency (CAFE) norms for fleet-wide CO2 emission targets. However, LCVs operate without such mandates, despite their high utilisation and substantial market presence.

Policymakers are finally addressing this regulatory gap: in late July, 2025, the Bureau of Energy Efficiency (BEE) unveiled a fuel consumption standard proposal for LCVs, which will run from 2027 through 2032.

Ahead of the release of the draft, automakers lobbied for full exemption of LCVs from CAFE regulations, citing the price sensitivity of the market and claiming that the standard would necessitate expensive technologies in internal combustion engines (ICE). Eventually, the request was set aside, signalling the government’s commitment to decarbonisation.

LCVs in India accounted for 48% of commercial goods vehicles in 2024, yet electrification remained low at 2%. Bringing this sector under regulatory oversight is pivotal for India’s clean transport agenda.

Where things stand

India’s LCV fleet averaged 147.5 g CO2/km in 2024. Without the minimal 2% share of battery electric LCVs (e-LCVs), this figure would be 150 g CO2/km, which shows how even marginal electrification impacts emissions.

Automakers have entered the Battery Electric Vehicle (BEV) market with few models, offering sub-35 kWh battery packs with maximum ranges of 150 km. Why so cautious? Market realities are tough: high upfront costs and limited model availability constrain demand. Although battery LCVs offer lower total ownership costs than conventional LCVs, inconsistent purchase incentive policies among jurisdictions are not helping.

For example, the PM E-DRIVE incentive scheme excludes LCVs, though some State policies, such as those in Maharashtra and Madhya Pradesh, provide support to overcome the initial acquisition barrier.

Fuel efficiency standards

The potential of fuel efficiency standards to drive electrification is often misunderstood. While these regulations won’t guarantee widespread electrification, stringency does. When standards are lax, manufacturers find it cheaper to optimise existing ICE vehicles through modest upgrades than invest in electric vehicles. Here is proof of what happens when standards are too relaxed: BEVs make up just 3% of the passenger car fleet even after 8 years of CAFE norms.

Here is where the math gets interesting. ICCT research shows 116.5 g CO2/km is the crucial threshold at which introducing e-LCVs becomes more cost-effective for compliance than ICE-only advancements. Put simply, beyond this point, CO2 reductions cost manufacturers less if achieved through electrification than ICE upgrades. The Bureau of Energy Efficiency’s proposed 115 g CO2/km standard just surpasses this benchmark, meaning entry of e-LCVs into the market is feasible but not strong enough to drive significant electrification.

There is a chicken-and-egg problem here: most conventional LCVs cost below ₹1 million, while BEV equivalents typically exceed this, making manufacturers reluctant to transition. Electrification momentum spurs innovation, scales production, and, together with falling battery prices, reduces BEV upfront cost.

To catalyse BEV penetration, regions such as China, the European Union, and the United States use a super credit multiplier, which counts each BEV multiple times when calculating compliance. Think of it as regulatory accounting that makes going electric look more attractive on paper: super credits make electrification a more cost-effective pathway to compliance.

The draft proposal introduces super credits for e-LCVs and assigns them a CO2 value of zero for compliance, further reinforcing BEV support (unlike the passenger car standards, which include upstream emissions).

However, the proposal also extends these credits to intermediate technologies like hybrid BEVs and applies CO2 offset factors to select ICE technologies. This approach risks fragmenting the market, essentially postponing BEV adoption. If manufacturers can comply by tweaking conventional vehicles or adding hybrids, why invest in electrification? Credits and offset factors — designed as an interim measure to be phased out as the market matures — can ease early compliance by artificially amplifying the emission reductions but dilute the regulation’s effectiveness.

The Bureau of Energy Efficiency’s proposal considers phasing out super credits for e-LCVs but continuing incentives for hybrids and select ICE technologies. This could prolong the dominance of ICEs.

The way forward

So, what is the bottom line? India has got the pieces; now it needs to put them together. The key to electrification lies in smart policy design. A stringent standard that makes electrification economically compelling, and a strategic use of incentives, can drive genuine transformation. These elements, together with a timely rollout of regulations, will determine whether LCVs drive the transition to clean transport.

The alternative is to repeat the challenges seen in the passenger car segment, where relaxed standards and ongoing incentives have kept electrification at just 3%.

Moorthy Nair, Researcher at the International Council on Clean Transportation

Published – January 28, 2026 01:12 am IST