Hello, this is Priyanka Salve, writing to you from Singapore.<\/p>\n
Welcome to the latest edition of\u00a0“Inside India<\/a>”\u00a0\u2014 your one-stop destination for stories and developments from the world’s fastest growing large economy.<\/p>\n Indian consumers’ desire to shift away from gasoline-based cars should have been Tesla and BYD’s moment to shine in the world’s third-largest auto market. But legacy carmakers that have dominated the Indian market for decades have an ace up their sleeve \u2014 hybrid cars.<\/p>\n Enjoy!<\/p>\n Any thoughts on today’s newsletter?\u00a0Share them<\/a>\u00a0with the team.<\/p>\n The big story<\/p>\n The demand for electric vehicles is surging<\/a> worldwide, but Indian consumers are choosing a different ride \u2014 hybrid cars that don’t need external charging. <\/p>\n Hybrid cars are expected to reach 10% of total car sales in India<\/a> in the financial year ending March 2027, while EVs are expected to account for 5%, according to a report by Indian research firm Care Ratings. <\/p>\n Cost-conscious consumers who were previously buying diesel vehicles have started shifting to hybrids, Puneet Gupta, director at S&P Global Mobility with a focus on the Indian market,\u00a0told CNBC.<\/p>\n Hybrid vehicle sales have risen nearly fourfold in the world’s third-largest<\/a> auto market to 362,866 units in the financial year ending March 2026, from 98,010 units in the financial year ending March 2020, according to Care Ratings. <\/p>\n Meanwhile, annual sales of electric vehicles were 131,865 units in the year to March 2026, the report, based on the Indian government’s vehicle registration data, showed. <\/p>\n “It’s clear that hybrid cars are gaining traction [in India] faster than EVs in the passenger car segment,” Diwakar Murugan, senior automotives analyst at Omdia, said in an email to CNBC. He added it was “remarkable” that hybrids are punching above their weight, having achieved strong growth with just eight models in the market so far, compared to more than 40 EV models.<\/p>\n The shift away from internal combustion engine<\/a>, or ICE, vehicles should have ushered global EV companies like Tesla<\/a> and BYD<\/a> into India, but it turns out that Japanese manufacturers, who already dominate India’s auto space, are set to deepen their grip on the market by offering hybrid cars instead of pure EVs. <\/p>\n Tesla has sold fewer than 400 cars while BYD has sold less than 7,000 in India since 2025, according to government data<\/a>.<\/p>\n Even in the EV space, automakers Mahindra & Mahindra<\/a> and Tata Motors<\/a>, which primarily sell ICE cars, are the leading players. That’s a stark contrast to BYD and Tesla’s global dominance: in 2025, BYD became the world’s top EV seller<\/a> with 2.26 million units, while Tesla sold 1.64 million. <\/p>\n Rise of hybrids<\/p>\n In hybrids, Japan’s Toyota<\/a> and Maruti Suzuki<\/a> \u2014 the Indian subsidiary of Suzuki Motor<\/a> \u2014 are the top manufacturers in India, with popular models including the Toyota Innova Hycross and Maruti Grand Vitara, said Arun Agarwal, vice president of fundamental research at Indian brokerage Kotak Securities. <\/p>\n These companies already dominate the broader Indian auto market, where the majority of their sales constitute ICE vehicles. <\/p>\n Maruti Suzuki leads auto sales with more than 1.8 million cars sold in the 12 months ended March 2026, as per data from auto industry body the Society of Indian Automobile Manufacturers, including 20,466 strong hybrids, as per data shared by S&P Global Mobility.<\/p>\n Japanese-Indian joint venture Toyota Kirloskar Motors sold 366,896 cars, with 91,536 strong hybrids during the same period.<\/p>\n Hybrid cars come in mild and strong variants depending on their battery capacity. Unlike mild hybrids, strong hybrids can drive solely on electric power \u2014 for short distances at low speeds \u2014 resulting in better fuel efficiency.<\/p>\n NEW DELHI, INDIA – 2022\/07\/01: Press reporters seen around the vehicle during the launch. Toyota unveiled the new Urban Cruiser Hyryder at Hyatt Aerocity, Toyotas first Self-charging Strong Hybrid Electric SUV and the first of its kind, in the B SUV segment in India. (Photo by Pradeep Gaur\/SOPA Images\/LightRocket via Getty Images)<\/p>\n Sopa Images | Lightrocket | Getty Images<\/p>\n Given the increasing customer acceptance, experts said that over the next 12 months, more hybrid car launches are expected than in the last five years combined. <\/p>\n “Hybrids don’t require any behavioral change as consumers refuel at a petrol pump, just like they always have,” said Murugan, adding that hybrids offer better mileage without the range anxiety of EVs.<\/p>\n Experts told CNBC that this trend is likely to sustain, as many leading car companies in India are launching new hybrid models this year, attracting buyers looking for better fuel efficiency. Meanwhile, EV adoption in the country suffers from a lack of adequate charging infrastructure, limited access to affordable global EVs, and anxiety about resale value, Gupta said.<\/p>\n Hyundai<\/a> and Kia<\/a>, French carmaker Renault<\/a>, Honda<\/a> and Maruti Suzuki are all planning to launch new hybrid models for the Indian consumer, analysts said.<\/p>\n Meanwhile, despite a warming of ties between<\/a> India and China and a trade deal<\/a> between New Delhi and Washington, both Tesla and BYD await their share of the world’s third-largest auto market as they continue to face sky-high duties<\/a>.<\/p>\n Need to know<\/p>\n U.S. seeks bigger energy foothold in India India, South Korea aim to deepen ties amid geopolitical uncertainty Won’t be surprised if there’s ‘one more term’ before the U.S.-India trade agreement Coming up <\/p>\n April 23: HSBC composite flash PMI for April<\/p>\n April 28: India’s industrial output for March<\/p>\n
The United States is stepping up efforts<\/a> to sell oil and gas to India as the\u00a0world’s third-largest energy <\/a>market\u00a0grapples with supply disruptions from the Middle East and finds its alternatives shrinking after Washington ended waivers for Iranian and Russian crude.<\/p>\n
Trade uncertainty with the U.S. and the push to diversify away from China make India and South Korea natural partners \u2014 but their relationship has yet to translate from intent into meaningful execution<\/a>.<\/p>\n
Sarah Bianchi, former deputy U.S. trade representative and currently senior managing director at Evercore, said given the difficult issues<\/a> involved in U.S.-India trade negotiations, there could be more change before a deal finally gets done.<\/p>\n