India's E2W Growth Slows Amid Magnet Shortage
Analysis based on 7 articles · First reported Feb 04, 2026 · Last updated Mar 02, 2026
The Indian electric two-wheeler market faces short-term headwinds due to Rare-earth magnet shortages and shifting price dynamics, impacting growth forecasts. However, the Indian government's initiatives to boost domestic Rare-earth magnet production are expected to support the long-term growth and self-reliance of the EV sector.
CRISIL Ratings forecasts a slowdown in India's electric two-wheeler (E2W) volume growth to 12-13% in FY2026 from 22% last year, primarily due to supply-side disruptions caused by a shortage of Rare-earth magnets and shifting price dynamics. Despite this, a rebound to 16-18% growth is expected next fiscal year, driven by stable raw material supplies and improved component sourcing. The total cost of ownership for E2Ws remains favorable compared to ICE vehicles. Legacy manufacturers are gaining market share due to established ecosystems, while new-age EV-only players face profitability pressures. The Indian government is actively addressing the Rare-earth magnet shortage by greenlighting a INR72.8bn scheme to establish 6,000 tonnes per annum of integrated Rare Earth Permanent Magnet manufacturing capacity and setting up Dedicated Rare Earth Corridors in states like India===Odisha, India===Kerala, India===Andhra Pradesh, and India===Tamil Nadu. These efforts aim to reduce India's dependency on imports, mainly from China, and align with national goals of self-sufficiency and sustainable development.
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