Govt extends PM E-DRIVE subsidy for e2Ws till FY28, allocates ₹1K cr more

Additional funding will extend incentives for electric two-wheelers until March 2028 as the government seeks to raise e2W penetration from the current 7.6 per cent to 9-10 per cent

The central government has sanctioned an additional Rs 1,000 crore for electric two-wheelers (e2Ws) under the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme, extending incentives for the segment until March 2028, a Ministry of Heavy Industries (MHI) official said.

 

The additional funding comes after the ministry sought an extension beyond July 2026, when the earlier deadline for e2W incentives was due to end.

 

“Since the e2W scheme was due to close on 31 July, we had requested the Ministry of Finance for additional funds so that the scheme could continue until March 2028. The Ministry of Finance has agreed to our request, and Rs 1,000 crore more has been sanctioned specifically for e2Ws,” the official said.

   

E2W penetration in India is currently around 7.6 per cent. “We think that we need to take this to at least 9-10 per cent... Two-wheelers are used by the mass public and by a large number of citizens. This will affect the lives of a lot of people and addresses the last-mile mobility issue,” he said.

 

The PM E-DRIVE scheme was originally notified in September 2024 with a total outlay of Rs 10,900 crore and was initially scheduled to run from October 1, 2024, to March 31, 2026. The government subsequently extended the overall scheme by two years to March 31, 2028. This was later extended to July 31, 2028. Under the scheme, each approved e2W receives an incentive of up to Rs 5,000.

 

The ministry's decision to seek additional support for e2Ws comes even as it has begun tapering incentives in segments where electric-vehicle adoption has risen sharply. The official cited electric three-wheelers in the L5 category, or heavier three-wheelers, as an example.

 

“In the case of three-wheelers, since we reached a very high penetration level of 41 per cent, which was more than expected, subsidies for this component were stopped in December 2025,” he said.

 

The official said the government had expected subsidies to reduce and eventually stop as electric-vehicle penetration increased. “When we formulated the scheme, we had said that worldwide, as electric vehicle penetration rises, government subsidies taper down and eventually stop,” he said.

 

E2Ws, however, have not yet reached the level of adoption at which the ministry believes subsidies can be withdrawn. “With two-wheelers and three-wheelers, I think we should be in a very good position,” the official said.

 

India is already the world's second-largest market for e2Ws by volume, behind China, according to the official. He said the domestic industry has built substantial research and development (R&D) capabilities during the past five to six years.

 

“The industry has developed significant R&D capabilities over the last five to six years. We have very large R&D teams in the sector, and our R&D capabilities in e2Ws are among the world's best,” the official said.

 

The official said the government expects the industry to make further progress in the next two years. “That is why I believe we are very near achieving the required milestones within the next two years,” the official added. The PM E-DRIVE scheme has given incentives to about 2.5 million electric two-wheelers to date.