Govt extends PM E-Drive subsidy for electric two-wheelers to FY28, raises allocation
NEW DELHI: The government has extended subsidies for electric two-wheelers under the PM E-Drive scheme till FY28 and raised the allocation for the segment by nearly ₹1,000 crore, according to a notification late Monday.
Mint first reported in May that the government was planning to extend these benefits, which were slated to end in FY26. The move comes days after a Rajya Sabha standing committee urged the heavy industries ministry to expedite the extension of subsidies.
The heavy industries ministry had urged the finance ministry to raise the budgetary outlay for electric two-wheelers to ₹3,000 crore till FY28, according to the standing committee on industry report dated 6 August.
The allocation for e-two-wheeler incentives has been increased to ₹2,767 crore, from ₹1,772 crore till FY28, while the number of vehicles eligible for the subsidy has been raised to 4.57 million from over 2.4 million, according to the notification.
The scheme’s total outlay has also been increased to ₹11,900 crore from ₹10,900 crore.
The subsidy rate will remain at ₹2,500 per kWh of battery capacity, capped at ₹5,000 per electric two-wheeler. Under the earlier scheme, the incentive was ₹5,000 per kWh in the first year and ₹2,500 per kWh in the second year. The last date for claiming the e-two-wheeler subsidy will now be 31 December 2027.
The extension provides greater policy visibility to electric two-wheeler manufacturers as the segment continues to expand. Vahan data show that electric two-wheeler sales rose to 1.46 million in FY26 from 252,787 in FY22, even as petrol two-wheeler sales fell to about 11 million from 13.2 million over the same period.
Petrol impact
The shift to electric two-wheelers (2Ws) could also help reduce India’s dependence on petrol. Two-wheelers consume two-thirds of the 42.6 million tonnes of petrol sold in India in FY26, according to data from the Petroleum Planning and Analysis Cell.
The move follows a push from the industry body Society of Indian Automobile Manufacturers for continuation of the incentives as the original two-year PM E-Drive scheme approached its FY26 end date. The government subsequently extended the claim period to July 2026 without increasing the allocation.
Central government subsidies for electric 2Ws in the world’s largest market after China were slated to end in FY26, as the PM E-Drive was initially planned as a two-year scheme.
The PM E-Drive scheme covers electric two-wheelers, three-wheelers (L5 and L3 categories), e-buses, e-trucks, and electric and hybrid ambulances.
Subsidies for L5 category electric 3W have already been completed. Now, incentives for electric two-wheelers and L3 category e-rickshaws, as well as electric and hybrid ambulances and e-trucks, will continue till FY28.
“With 2-wheelers accounting for nearly three-fourths of India’s vehicle sales and already leading EV adoption, the increased PM E-Drive allocation can further accelerate electrification,” said Amit Bhatt, India managing director of global think tank International Council on Clean Transportation. “It can also help support and steer the phase-out of ICE two-wheelers in Delhi, as proposed under the government’s new EV policy. Importantly, it provides OEMs with greater visibility on future demand, helping them plan investments and accelerate the transition,” Bhatt added.
Sharif Qamar, associate director of transport and urban governance at New Delhi-based think tank The Energy and Resources Institute (TERI) said, “Two-wheelers form 75-80% share in total vehicles sold and on-road vehicle population. The downside is that these contribute bulk of the ambient air pollution.”
“The amended scheme, with a focus on two-wheelers, is in line with the ‘need of the hour’ to promote the uptake of electric two-wheelers. This will also help formalize the investment plans of OEMs to ramp up production of electric two-wheelers.”
India’s top five electric two-wheeler makers by market share, Hero MotoCorp, Bajaj Auto, TVS Motor, Ather Energy and Ola Electric did not immediately respond to Mint’s request for comment.
