The Ministry of Heavy Industries has amended the PM E-DRIVE Scheme, halving the demand incentive for electric two-wheelers to ₹2,500 per kWh, capped at ₹5,000 per vehicle, for the period from April 2025 to March 2028. The amendment also raises the scheme’s total financial outlay to ₹11,900 crore and extends support for registered e-2Ws until March 31, 2028. The move reflects the government’s strategy of gradually tapering purchase subsidies as the electric vehicle market matures.
What Is the PM E-DRIVE Scheme?
The PM E-DRIVE Scheme, short for the Prime Minister’s Electric Drive Revolution in Innovative Vehicle Enhancement, is the flagship central programme for promoting electric mobility in India. The Union Cabinet approved it on September 11, 2024, and the Ministry of Heavy Industries notified it through Gazette Notification S.O. 4259(E) on September 29, 2024, before its formal launch on October 1, 2024, at Bharat Mandapam in New Delhi.
The scheme was originally designed to run for two years, from October 2024 to March 2026, with an outlay of ₹10,900 crore. It replaced the earlier Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME) scheme and subsumed the short-lived Electric Mobility Promotion Scheme (EMPS) 2024, which had been implemented from April to September 2024 with an outlay of ₹500 crore.
The scheme has three broad objectives: accelerate the adoption of electric vehicles across the country, establish a robust network of charging infrastructure, and build a strong domestic EV manufacturing ecosystem.
Key Components and Outlay
The PM E-DRIVE Scheme works through two types of financial support. The first is demand incentives, which are subsidies given to buyers to lower the upfront purchase cost of EVs. The second is grants for creating capital assets, which fund electric buses, public charging stations, and the modernisation of testing agencies.
| Component | Allocation | Details |
|---|---|---|
| Demand incentives (e-2Ws, e-3Ws, e-ambulances, e-trucks) | ₹3,679 crore | Direct subsidies to reduce purchase price |
| Electric buses (e-buses) | ₹4,391 crore | Deployment of 14,028 e-buses in cities with more than 4 million population |
| Charging infrastructure | ₹2,000 crore | 22,100 fast chargers for e-4Ws, 48,400 for e-2Ws/e-3Ws, and 1,800 for e-buses |
| e-ambulances | ₹500 crore | Support for deployment of electric ambulances |
| e-trucks | ₹500 crore | Incentives linked to scrapping of old trucks |
| Modernisation of testing agencies | ₹780 crore | Upgrading MHI testing facilities for new EV technologies |
The scheme is a fund-limited programme, meaning the total payout cannot exceed the sanctioned outlay. If funds for the scheme or any of its sub-components are exhausted before the terminal date, that component is closed and no further claims are accepted.
What Has Changed for Electric Two-Wheelers?
Under the latest amendment, the demand incentive for registered electric two-wheelers has been reduced to ₹2,500 per kWh of battery capacity, capped at ₹5,000 per vehicle, for vehicles registered between April 1, 2025, and March 31, 2028. This is exactly half the earlier incentive of ₹5,000 per kWh, which was capped at ₹10,000 per vehicle during FY 2024-25.
The amendment also increases the total financial outlay of the scheme from ₹10,900 crore to ₹11,900 crore, adding ₹1,000 crore to the e-2W component. The Ministry of Heavy Industries has earmarked ₹2,767 crore for registered e-2Ws, enough to support up to 45.79 lakh vehicles. This is a significant increase from the earlier allocation of ₹1,772 crore for 24.79 lakh e-2Ws.
How the New Incentive Works
Only electric two-wheelers with an ex-factory price of up to ₹1.5 lakh are eligible for the incentive. The actual amount a buyer receives depends on the battery capacity of the vehicle, but it cannot exceed the ₹5,000 ceiling. The incentive is further limited to either the specified amount or 15% of the ex-factory price, whichever is lower.
The incentive is available to both commercially registered and privately or corporate-owned e-2Ws, but only for vehicles fitted with advanced batteries, such as lithium-ion batteries. Incentives are disbursed through an Aadhaar-authenticated e-voucher system, under which buyers get a voucher on their registered mobile number at the time of purchase. The buyer signs it at the dealership, and the dealer uploads it on the PM E-DRIVE portal to claim reimbursement from the government.
The last date for submitting claims under the scheme is December 31, 2027, and no payments will be made by the Ministry or the project management agency after March 31, 2028.
Why the Scheme Has Been Amended
The reduction in the e-2W incentive was not sudden. The original PM E-DRIVE notification of September 2024 had already stated that incentives would be halved from FY 2026 onwards, as part of a planned tapering of government support. The government keeps the per-kWh incentive open to review, and it may be revised and notified from time to time based on reductions in vehicle costs.
The amendment also follows the earlier extension announced by Heavy Industries Minister H. D. Kumaraswamy in August 2025, which stretched the scheme from two years to four years, until March 31, 2028. The extension was needed mainly for e-trucks, e-buses, and testing agencies, which face longer gestation periods. The e-truck market is still nascent, and full-scale commercial production is expected to take time. Similarly, the deployment of 14,028 e-buses requires a post-selection process and milestone-based grant disbursement spread over about 18 months.
For e-2Ws specifically, the March 2026 notification had set July 31, 2026, as the terminal date for registered vehicles. The latest amendment now extends this support window to March 31, 2028, while keeping the reduced incentive rate. Industry bodies had pressed for continued support because e-2Ws have not yet reached the adoption levels where subsidies can be fully withdrawn.
Another notable change is that the L5 category of electric three-wheelers was closed on December 26, 2025, since the target for the segment had already been achieved. However, registered e-rickshaws and e-carts continue to receive support until March 31, 2028, at a reduced rate of ₹2,500 per kWh, capped at ₹12,500 per vehicle.
India’s EV Journey: From FAME to PM E-DRIVE
The PM E-DRIVE Scheme is the latest step in India’s electric mobility policy, which began with the National Electric Mobility Mission Plan (NEMMP) 2020, launched in 2013. Under this mission, the government launched the FAME India Scheme in April 2015 with an initial outlay of ₹795 crore (later raised to ₹895 crore). FAME-I, which ran until March 2019, supported around 2.8 lakh hybrid and electric vehicles.
The FAME-II Scheme, launched on April 1, 2019, with an outlay of ₹10,000 crore (later raised to ₹11,500 crore), ran for five years until March 2024. It focused mainly on public and commercial transport, covering e-buses, e-three-wheelers, e-four-wheelers, and privately owned e-two-wheelers. FAME-II provided subsidies of up to ₹15,000 per kWh for e-2Ws and also funded charging infrastructure and hydrogen fuel cell buses.
After FAME-II ended, the government ran the short-term EMPS 2024 from April to September 2024 before transitioning to the PM E-DRIVE Scheme.
Progress and Adoption So Far
The PM E-DRIVE Scheme has made strong progress. As of January 2026, more than 22.12 lakh EVs had been sold under the scheme, including 19.19 lakh e-2Ws and 2.93 lakh e-3Ws, against an overall target of about 28 lakh vehicles. The scheme has also driven up sales across segments, with e-2W registrations reaching 14.6 lakh units in FY26, up from just 2.5 lakh units in FY22.
For the e-bus component, tenders for 10,900 buses allocated in Phase I have been concluded by Convergence Energy Services Limited (CESL), the nodal agency for demand aggregation, while tenders for the remaining 2,900 buses in Phase II were floated in January 2026.
The Road Ahead
The reduced incentive signals a shift in the government’s approach from heavy purchase subsidies to supporting the ecosystem, including charging infrastructure and domestic manufacturing. As battery costs fall, the need for per-vehicle subsidies declines, and the government can redirect funds towards building a dense public charging network, a key barrier to EV adoption.
The extension of the e-2W incentive until March 2028 gives manufacturers and buyers a longer policy window. However, the halved subsidy means buyers will see a smaller price reduction than in the earlier years. Some states run their own EV policies on top of the central scheme, so the overall benefit a buyer receives varies by state.
For India’s goal of net zero emissions by 2070 and the target of 30% electric vehicle sales by 2030, consistent policy support will remain important. The government is also promoting domestic battery manufacturing through schemes such as the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) batteries, which aims to build 50 GWh of domestic battery manufacturing capacity. Together, these initiatives aim to make electric mobility more affordable without permanent reliance on subsidies.
Key Takeaways
- The PM E-DRIVE Scheme, notified on September 29, 2024, by the Ministry of Heavy Industries, has a total financial outlay of ₹11,900 crore.
- The incentive for electric two-wheelers has been reduced to ₹2,500 per kWh, capped at ₹5,000 per vehicle, for the period April 2025 to March 2028.
- The earlier incentive of ₹5,000 per kWh, capped at ₹10,000 per vehicle, applied during FY 2024-25.
- The scheme now supports up to 45.79 lakh registered e-2Ws with an earmarked allocation of ₹2,767 crore.
- The scheme allocates ₹4,391 crore for 14,028 electric buses, ₹2,000 crore for charging infrastructure, and ₹780 crore for upgrading testing agencies.
- The last date for submitting claims under the scheme is December 31, 2027.
