PM E-DRIVE Scheme is Now in Action: INR 10,900 Crore EV Subsidy Initiative

To promote EVs in India, the government has been initiating many schemes since 2015 and FAME was the first initiative. For electric two-wheelers, a demand incentive of up to ₹10,000 per kWh was provided in the first phase. FAME first phase carried out till 2019 and later they launched FAME II with a demand incentive of ₹15,000 per kWh for e2Ws was provided in the second phase. Later they launched a temporary scheme called EMPS with a lower budget after the discontinuation of FAME II. But rather than continuing the FAME series they have ended it.

The Government of India has officially launched the PM E-DRIVE scheme with a budget outlay of INR 10,900 crore, aimed at promoting the adoption of electric vehicles (EVs) in the country. The scheme will be in effect from 1st October 2024 to March 2026, offering various subsidies and grants to encourage EV purchases and the development of EV infrastructure. The program also encourages state governments to supplement these efforts by providing additional fiscal and non-fiscal incentives.

PM E-Drive Overview

Scheme Details and Objectives

The government issued a gazette statement announcing the commencement of the PM E-DRIVE program on October 1, 2024, with a target completion date of March 31, 2026. The principal objectives of the project are to accelerate the adoption of electric vehicles, establish a vast charging infrastructure throughout India, and enhance the ecosystem supporting EV manufacture.
Furthermore, the Electric Mobility Promotion system (EMPS), 2024, will be incorporated into the system. "The number of vehicles and the expenditure under EMPS, 2024 is subsumed under the PM E-DRIVE Scheme," said the announcement.

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Subsidies and Financial Support

PM E-DRIVE will offer subsidies for electric two-wheelers, three-wheelers, e-ambulances, e-trucks, and other new and emerging EV categories. It also includes grants for the creation of capital assets such as electric buses, charging stations, and upgrading testing agencies designated under the scheme.

The financial breakdown under the scheme allocates INR 8,070 crore in total subsidies for EVs. Electric buses will receive the largest share, with INR 4,391 crore, while two-wheelers will receive INR 1,772 crore. There is also a Phased Manufacturing Programme (PMP) under PM E-DRIVE to promote the localization of EV components. From December 1, 2024, EV chargers will need to have at least 50% domestic value addition (DVA) to qualify for incentives under the scheme.

Incentives for States

While the central government is taking the lead with PM E-DRIVE, the scheme calls for active participation from state governments. States are encouraged to provide additional fiscal and non-fiscal incentives, such as exemption from permits, concessional road tax, toll tax exemptions, reduced parking fees, and waived registration charges.

The government emphasised that these state-level incentives are essential to ensure the success of the scheme and further promote e-mobility across the country.

Reduction in Subsidies Over Time

The scheme also outlines a gradual reduction in financial support for EVs over time. Starting in 2025-26, the subsidy for electric two-wheelers will be reduced to INR 5,000 per vehicle, and for electric three-wheelers, the subsidy will be capped at INR 25,000 per vehicle.

Heavy Penalty in Case of Misuse

PM E-DRIVE follows in the footsteps of its predecessor, the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme. However, the earlier program faced issues with companies taking advantage of subsidies by selling imported vehicles. To address this, the new scheme includes stringent measures and checks to prevent misuse, ensuring that subsidies are only available for locally manufactured vehicles.