PM E-DRIVE, eBus Sewa: How the schemes may help accelerate EV adoption

The two schemes, with over Rs 14,000 crore allocated to boost EV adoption, focusing on electric two-wheelers, buses, and charging stations, aim to support India's emissions-reduction goals

To promote the use of electric vehicles (EVs) in the country, which is crucial for reducing carbon emission, the Union Cabinet approved two schemes on Wednesday with an allocation of over Rs 14,000 crore. The PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme with an allocation of Rs 10,900 crore over two years will replace the earlier Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme, which started in 2015 with an initial allocation of Rs 900 crore. The second version of the scheme, which ended last financial year, had a Budget allocation of Rs 11,500 crore. The new schemes are expected to improve the adoption of EVs in the country and build on the success of the previous initiatives. Given that the initial cost of EVs is higher than those operating on internal combustion engines, fiscal support is seen as a necessity to improve adoption.

The PM E-DRIVE scheme is expected to support about 2.47 million electric two-wheelers, 316,000 electric three-wheelers, and other emerging EVs with incentives worth Rs 2,679 crore. Under the scheme, Rs 500 crore each has been allocated for the increased adoption of electric trucks and electric ambulances. Further, Rs 4,391 crore has been assigned for procuring 14,028 electric buses in select cities. Besides, Rs 2,000 crore has been allocated for over 74,000 public charging stations. In addition, the PM-eBus Sewa-Payment Security Mechanism (PSM) scheme, with an outlay of Rs 3,435.33 crore, will focus on procuring and operating e-buses by public transport authorities. The scheme is expected to deploy over 38,000 electric buses between the current year and 2028-29. The scheme will also support the operation of such buses for 12 years from the date of deployment.
 

Aside from supporting electric two-wheelers, the focus this time is on increasing adoption in the commercial-vehicle space. There is no provision for electric cars, for instance. The focus on commercial vehicles makes sense and might give more value for fiscal support in terms of emission reduction because they tend to be more polluting. More electric trucks carrying goods in Delhi, for example, could provide significant relief. Similarly, electric buses in public transport will help reduce pollution in several Indian cities because they would be largely replacing diesel-run buses. Central budgetary support to the public transport authority is significant because most of them are in losses and not in a position to make significant investment. It is thus important that their contribution remains limited. The focus on charging stations should also help adoption. As reported by Business Standard, an EV-charging company has collaborated with the Indian postal service to launch an EV-charging station at a post office in Hyderabad. More such effort will need to be supported. Post offices mostly have a presence in prime locations and setting up EV-charging stations on available land can be a win-win proposition.
 

A new feature in the PM E-DRIVE scheme will be the Aadhaar-authenticated e-voucher for buyers. The voucher, to be issued to the buyer by the Ministry of Heavy Industries, will need to be signed by the buyer and submitted to the dealer, who will also have to sign and upload it to claim the demand incentive. While the initiative will help identify the ultimate beneficiary, it would be important to make sure that the platform works seamlessly and funds are transferred quickly. Disruption and delay could affect dealers, ultimately affecting EV sales. For a successful rollout, the government should carefully handle issues such as indigenisation and price ceilings, which affected the earlier scheme.