PM E-Drive scheme may get a longer run as EV makers seek support

Industry urges subsidy extension and PLI access to offset higher commodity prices

The Ministry of Heavy Industries (MHI) is considering an extension of the Prime Minister Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-Drive) scheme. For electric two-wheelers (e2Ws), the scheme was extended until July 31 this year from the earlier deadline of March 31, according to discussions between stakeholders and senior ministry officials.

 

Under the scheme, which has a total outlay of ₹10,900 crore, e2Ws are eligible for a subsidy of up to ₹5,000 per vehicle, or ₹2,500 per kilowatt-hour. The number of vehicles eligible for the subsidy has been capped at 2.4 million.

 

The scheme also provided incentives for electric three-wheelers, for which the allocated budget has already been exhausted. Incentives were also earmarked for electric buses, electric rickshaws, and electric carts, with the scheme scheduled to run until March 31, 2028.

 

A senior automotive industry executive who attended a meeting with top MHI officials said, “While they did not disclose the amount that could be earmarked, they did mention the possibility of extending the scheme during the discussions. If it happens, it would be a much-needed positive, especially amid concerns over rising commodity prices for the industry.”

 

The 2W industry has been pushing for the continuation of customer subsidies, arguing that they are key to driving volumes and increasing electric vehicle (EV) penetration. Many manufacturers have also sought an extension for a few more years, saying it is necessary for them to become globally competitive.

 

There are also clear signs that demand for e2Ws has outstripped supply in the first three months of the current financial year (2026-27). According to industry estimates, monthly demand has reached 240,000-250,000 units, while registrations have remained at 160,000-170,000 units, as reflected in June.

 

This has led to longer waiting periods, stretching to around 45 days for TVS Motor Company, 60 days for Ather Energy, and about 15 days on average for Bajaj Auto. EV makers are adding around 3 million units of annual production capacity to bridge the gap, but a large part of that capacity will come on stream only towards the end of this year or next year.

 

Recently, Union Minister for Heavy Industries H D Kumaraswamy met leading startups, including the chief executive officers (CEOs) of Ather Energy and River Mobility, among others. During the meeting, the companies sought an extension of the PM E-Drive scheme to offset rising commodity prices that have increased vehicle manufacturing costs.

 

They also urged the minister to include them in the current production-linked incentive scheme for automobile companies. Ather Energy CEO Tarun Mehta has publicly argued that the 13-16 per cent incentive available under the scheme to incumbent manufacturers and Ola Electric places companies such as Ather at a disadvantage, constraining their ability to innovate, launch products, and compete on a level playing field.