Govt likely to end demand subsidies for e2W, e3W in 2026

The government is likely to phase out demand incentives on purchasing electric two-wheelers and three-wheelers starting the financial year 2027, while certain segments such as electric trucks, buses, and charging infrastructure are likely to get a higher focus, according to a senior government official.

"PM E-Drive scheme is not a duplicate copy of FAME scheme…It has a different goal altogether. Some components [segments] of mobility will come to an end in 2026. They will not be supported anymore by the government," Minister of Heavy Industries Secretary Kamran Rizvi said on Tuesday.

Currently, electric two-wheelers, three-wheelers, buses, trucks and ambulances are eligible for demand incentives from the government. Rizvi noted that only those segments that have not reached 10% electric vehicle penetration will require demand incentives from 2026.

"Three-wheeler penetration has already crossed that 10% penetration level...Penetration in the two-wheeler segment is also at around 7-8% sometimes and in two years it is expected to cross 10%," he said on the sidelines of launching the PM E-Drive scheme.

The new Rs 10,900-crore PM E-Drive scheme, which supersedes the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) II scheme, was launched today. The temporary Electric Mobility Promotion Scheme (EMPS), which expired on September 30, has been subsumed under the PM E-Drive scheme.

The PM E-Drive continues with the same subsidy level as given in the EMPS for electric two-wheelers and three-wheelers but in its second year, the subsidies per vehicle for these two segments will be halved. The subsidies were also reduced in EMPS, compared with the FAME II scheme.

Electric two-wheelers currently get a subsidy of Rs 5,000 per kWh subject to a cap of Rs 10,000 per vehicle, but will be cut to Rs 2,500 per kWh with a cap of Rs 5,000 per vehicle from April 2025.

Similarly, e-rickshaws, which get a subsidy of Rs 5,000 per kWh with a cap of Rs 25,000 per vehicle and passenger and cargo electric autos, which receive a subsidy of Rs 5,000 per kWh with a cap of Rs 50,000 per vehicle will be reduced to half from April.

The PM E-Drive scheme focuses more on the electrification of public transport and improving the charging infrastructure. Unlike the earlier subsidy schemes, the government has this time included electric trucks and ambulances to be eligible for demand incentives.

Rizvi noted that the government has identified certain sunrise segments for electrification. “We did not think about certain segments earlier. Now they have been included. For example, electric trucks were not included in FAME schemes. Diesel trucks constitute 2% of the vehicles, but contribute 40% of the pollution,” he said.

Electric trucks and electric ambulances have been allocated a total of Rs 500 crore each in the scheme. The incentives for electric trucks will be given only if consumers purchase the vehicle after scrapping an old truck.

Meanwhile, the government has put a higher focus on improving the electric vehicle charging infrastructure this time by more than doubling the outlay for public charging stations to Rs 2,000 crore under the PM E-Drive scheme.

The scheme aims to support 22,100 fast chargers for electric four-wheelers, 1,800 fast chargers for electric buses and 48,400 fast chargers for electric two- and three-wheelers.