New EV scheme offers Rs 10,000 for 2-wheelers, Rs 50,000 for 3-wheelers

The new scheme fixes past FAME issues, addressing problems with imported vehicles and improper subsidy claims for domestically produced EVs

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The newly introduced electric vehicle (EV) subsidy scheme, PM E-Drive, will provide a subsidy of Rs 10,000 for each electric 2-wheeler sold until March 2025. This support will be reduced by half in the next financial year. For electric 3-wheelers, the scheme offers a Rs 50,000 subsidy, which will decrease to Rs 25,000 starting in April.

Union Heavy Industries Minister HD Kumaraswamy shared details of the scheme on Thursday, explaining that it aims to achieve a 10 per cent market share for electric 2-wheelers and a 15 per cent share for electric 3-wheelers by March 2026. The initiative seeks to boost the adoption of EVs and establish essential charging infrastructure to support cleaner transportation options.

When questioned about the exclusion of electric cars from the scheme, Kumaraswamy said that these vehicles benefit from a lower GST rate of 5 per cent.

The government has designed the new scheme by addressing the shortcomings of the previous FAME phases, which encountered issues with companies selling predominantly imported vehicles and improperly claiming subsidies intended for domestically produced EVs. Consequently, the government had to take action to recover these misappropriated funds.

Talking about how the new scheme will ensure adherence to domestic manufacturing standards, heavy industries secretary Kamran Rizvi said, “There will be conformity of production (COP) test conducted every six months.”

Regarding whether companies that have yet to repay improperly claimed subsidies will be permitted to join the new scheme, Kumaraswamy said, “How can we encourage defaulters who have misused the previous scheme?”

With a strong emphasis on advancing EVs for public transportation, the scheme allocates nearly 40 per cent of its total budget, amounting to Rs 4,391 crore, specifically for electric buses. This substantial investment underscores the government's commitment to promoting green public transport solutions.

[With agency inputs]