Why the unorganised sector, thanks to e-rickshaws, leads India's EV growth

While everyone's attention is riveted on electric two-wheelers and cars, e-rickshaws have proliferated, putting the unorganised sector in the forefront

October of 2014 was a defining moment for last-mile mobility in the country. The feudal practice of plying on a paddle rickshaw pulled by humans was to go away with the advent of electric rickshaws, or e-ricks, as the GenZ of Delhi University likes to call them.
 

Running on a battery, these e-rickshaws are a design amalgamation of a Kinetic Luna and a shrunk Vikram tempo. With a government-approved definition announced then, the e-rickshaws soon took over the streets: From Metro parking to crowded markets, from capital cities to Tier III towns.
 

What has not changed in the last decade is the regulations, rather the lack of them, for e-rickshaws. There is absence of robust rules, such as limits on the number of e-rickshaws to be registered in a city or strict enforcement of the mandatory biennial safety check certification. There is also lax enforcement of insurance and registration requirements, resulting in a proliferation of e-rickshaw manufacturers.
 

A staggering 479 manufacturers are currently in the electric three-wheeler segment in the country, according to data from the Vahan Dashboard of the Ministry of Road, Transport and Highways.
 

Mahindra, YC Electric, Saera, Piaggio, Bajaj, and Dilli Electric are among the top 10 players. But of the others, a large majority operates like a cottage industry: Dying e-rickshaws in their backyard. Some of them get rather low sales volumes: Maa Durga Electric, New Chawla Industries, Prestantia Creations, Hykon India are among the more 279 companies that have sold less than 100 e-rickshaws.
 

Fragmented market
 

“Manufacturing is easy and regulations are weak. It is the only reason why this industry has not become regularised yet,” says Pawan Kakkar, managing director, YC (Yatri Chetak) Electric Vehicles, the second largest seller of e-rickshaws in the country. Kakkar is also vice-president of the Electric Vehicle Manufacturers Society.

 

According to Central Motor Vehicle Rules, an e-rickshaw is a specialised, three-wheeled, battery-operated vehicle designed to provide last-mile connectivity to passengers for hire or reward. It can accommodate a maximum of four passengers (excluding the driver) and carry no more than 40 kg of luggage. Additionally, its motor power must not exceed 2,000 Watts, and its maximum speed is capped at 25 kilometres per hour.
 

The price of an e-rickshaw usually starts from Rs 1 lakh and goes up to Rs 3 lakh, according to industry estimates. The government incentivises e-rickshaw powered by lithium batteries with a subsidy worth Rs 25,000 under the Electric Mobility Promotion Scheme 2024 (EMPS 2024). Moreover, some state governments, too, provide subsidies.
 

The surge in demand for last-mile connectivity propelled e-rickshaw sales to surpass the 1.4 million mark in the past nine years, according to data from the Vahan Portal. Out of the 4 million electric vehicles sold nationwide since 2015, e-rickshaws constitute 35 per cent.
 

Though the major legacy players have a presence among the top sellers, consolidation remains low compared to other categories. Of the 210,000 electric three-wheelers sold since January this year, the top 10 players collectively accounted for only 38 per cent. This contrasts sharply with the electric two-wheeler category, where the top 10 players contributed a staggering 93 per cent of total sales. Similarly, in the electric four-wheeler segment, Tata alone commanded approximately 68 per cent market share, the Vahan Portal data shows.
 

Unorganised to the fore
 

Ayush Lohia, CEO of Lohia, a Delhi-based e-rickshaw company, says the dominance of the unorganised sector in India's e-rickshaw industry can be attributed to the presence of numerous local players compared to the established ones. This creates a competitive landscape where smaller, often unregulated entities thrive due to their flexibility and adaptability to local market nuances.
 

According to Vahan data, Lohia has sold less than 500 vehicles in 2024 so far.
 

“Affordability is the key in the e-rickshaw category. People often opt for cheaper products over branded ones. Consequently, sales are not consolidated, and many startups end up selling only a few hundred units,” says Preetesh Singh, specialist CASE and alternate powertrains, NRI Consulting & Solutions.
 

The easy availability of small private finance options is also driving the purchase of e-rickshaws. “The majority of e-rickshaw buyers obtain loans from local financiers. Although there are some organised players like AMU Leasing and Revv entering the market, their market share remains relatively small,” says Singh.
 

Sector experts say e-rickshaws offer economic viability, with drivers earning between Rs 500 and Rs 700 a day. Any increase in regulatory requirements would likely lead to price hikes for these vehicles, potentially undermining the country’s push towards electric vehicles.
 

“The Government is hesitant to impose regulations because thousands of economically disadvantaged households rely on e-rickshaws nationwide. Tighter norms could result in price escalations, posing affordability challenges,” says Singh.
 

Cartel at work?
 

Industry experts cite cartelisation as a major obstacle to market control in the e-rickshaw industry. Despite guidelines stipulating that one licence-holder can only purchase one rickshaw, there are fears that a significant portion of e-rickshaws are owned by a select few individuals who then lease them out through daily or monthly subscriptions. Operating within a radius of less than 10 kilometres, these players find it easier to manage things and consolidate their control over the market.
 

“In Delhi there are around 250,000 e-rickshaws, of which around 22,000 have valid number plates, and insurance and fitness certificates. But a few people together own more than 100 e-rickshaws,” says Kakkar of YC, adding, “administrative strictness is the need of the hour.”
 

A local police station house officer in Delhi says one of the reasons for not seizing unregistered e-rickshaws is the absence of a standard operating procedure for their seizure and the lack of space at police stations.
 

“We don’t have the space to accommodate around 1 million e-rickshaws in the police station, which we believe are playing without proper documents. If we seize them all at once, there are no guidelines on how to scrap them or auction them,” the officer explains.
 

In Delhi, the government mandates a separate licence for e-rickshaws, requiring police verification. However, in other states, any valid driving licence suffices. In an effort to address traffic congestion in the national capital, the government in December 2014 banned e-rickshaws from plying on 236 roads.
 

However, regardless of where they operate, a significant portion of e-rickshaws is from small manufacturers.
 

“All rickshaws are the same. Branded ones cost more, but function the same. They only last for three years, regardless of the brand, so why spend extra money on a branded one,” says Vijay, who owns an e-rickshaw whose make is Khalsa EV.

Knowing your e-rickshaw
 

- What is an e-rickshaw?
 

According to CMVR rules, an e-rickshaw is a specialised, three-wheeled, battery-operated vehicle designed for last-mile passenger transport
 

- How many passengers can it carry?
 

It can carry a maximum of four passengers (excluding the driver) and up to 40 kg of luggage, with motor power not exceeding 2,000 Watts and a top speed of 25 kmph
 

- How many e-rickshaw manufacturers do we have?
 

There are 479 manufacturers currently active
 

- How many do they sell?
 

279 companies sell fewer than 100 e-rickshaws each
 

- How is the market?
 

Fragmented; the top 10 players collectively account for only 38% of all sales
 

- How are e-rickshaws regulated?
 

In December 2014, the Delhi government banned e-rickshaws from 236 roads, but other states lack such regulation