The Indian government has officially launched the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-Drive) scheme, signaling a significant shift in its approach to fostering electric vehicle (EV) adoption. With an outlay of ₹10,900 crore, the scheme is set to replace the earlier Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) program, which concluded in March 2024. The PM E-Drive scheme aims to catalyze the growth of electric two-wheelers, three-wheelers, trucks, buses, and ambulances over the next two years.
Focus on Public Transport and Green Mobility
As part of the broader push for green mobility, the government has also approved the PM-eBus Sewa-Payment Security Mechanism (PSM) scheme. This initiative is designed to support the procurement and operation of over 38,000 electric buses by 2028-29 with a budget of ₹3,435 crore. Together, these schemes represent a significant effort to decarbonize India's transportation sector and reduce reliance on fossil fuels.
Subsidies to Boost EV Purchases
Under PM E-Drive, the government is providing subsidies for purchasing a range of electric vehicles (EVs), including two- and three-wheelers, electric trucks, buses, and ambulances. Notably, the scheme excludes electric cars from its subsidy framework. A substantial allocation of ₹3,679 crore has been earmarked to incentivize EVs, benefiting around 24.79 lakh electric two-wheelers, 3.16 lakh three-wheelers, and 14,028 buses.
This financial backing will be complemented by support for the establishment of 88,500 charging stations across the country. The government has committed ₹2,000 crore to install 22,100 fast chargers for electric four-wheelers, 1,800 for buses, and 48,400 for two- and three-wheelers.
Key Highlights of PM E-Drive
- Total Outlay: ₹10,900 crore over two years.
- Incentives: ₹3,679 crore to incentivize e-2Ws, e-3Ws, e-trucks, and e-ambulances.
- Charging Infrastructure: ₹2,000 crore allocated for 88,500 charging stations nationwide.
- e-Buses: Procurement and operational support for 14,028 electric buses with ₹4,391 crore allocated.
Union Minister Ashwini Vaishnaw emphasized the importance of localizing supply chains for electric vehicles, stating, "Localisation is integral to every incentive scheme. We want to ensure that India develops its own technologies and supply chains in the EV sector."
India's EV Adoption: Challenges and Opportunities
India's EV adoption is still in its early stages, with only about 7% penetration in the vehicle market. Two-wheelers dominate the sector, accounting for 56% of sales in the last financial year, while three-wheelers followed with a 38% share. The country has faced several challenges in accelerating the EV revolution, including high upfront costs and limited charging infrastructure.
The subsidies provided under schemes like PM E-Drive are expected to address these barriers, making electric vehicles more affordable and accessible for consumers. Additionally, by enhancing charging infrastructure, the scheme aims to improve the convenience and feasibility of EV ownership.
Transition from FAME 2 to PM E-Drive
The FAME scheme, launched in 2015, played a pivotal role in promoting EVs in India. The first phase of the FAME initiative had an outlay of ₹895 crore, while FAME 2, which began in 2019, had a budget of ₹10,000 crore, later extended to ₹11,500 crore.
The scheme successfully supported over 11.7 lakh two-wheelers, 1.3 lakh three-wheelers, 16,631 four-wheelers, and 4,766 buses. However, as FAME 2 concluded in March 2024, the government introduced a temporary stopgap scheme called EMPS 2024 with a ₹778 crore budget. Unlike FAME 2, EMPS only supported electric two- and three-wheelers and operated at a reduced subsidy level.
Now, with PM E-Drive, the government is expanding its EV initiatives to a wider range of vehicles, with a special focus on public transport.
PM-eBus Sewa Scheme: Enhancing Urban Mobility
In tandem with PM E-Drive, the PM-eBus Sewa-Payment Security Mechanism (PSM) scheme is set to transform urban transportation in India. The scheme addresses the issue of high upfront costs that have hindered state transport undertakings (STUs) from procuring electric buses.
To make procurement easier, the scheme will introduce a Payment Security Mechanism (PSM) to ensure timely payments to Original Equipment Manufacturers (OEMs) and operators. The government will guarantee payments through CESL (Convergence Energy Services Limited) in case of default by STUs. This will not only increase the confidence of OEMs but also encourage more STUs to adopt electric buses.
Under this scheme, the government will support the operation of e-buses in cities with populations below 5 million, offering financial assistance based on a per-kilometer model. The buses will be operated for a period of up to 12 years from deployment.
A Push for Sustainable Public Transport
The PM-eBus Sewa scheme is expected to add over 38,000 electric buses to Indian roads by 2028-29, significantly reducing carbon emissions from public transportation. STUs will have the option to procure buses under either a Gross Cost Contract (GCC) or outright purchase.
The PM-eBus scheme’s main objective is to increase electric bus penetration in smaller cities while ensuring the operational viability of the buses through guaranteed payments.
Looking Ahead
As India accelerates its shift toward a green and sustainable transportation ecosystem, schemes like PM E-Drive and PM-eBus Sewa mark a crucial step forward. By offering subsidies, incentivizing local manufacturing, and expanding charging infrastructure, these schemes aim to overcome the challenges that have hindered faster adoption of electric vehicles.
While electric vehicle penetration is still at an early stage, these initiatives lay the foundation for India’s transition to a cleaner and more sustainable future in mobility. As details regarding the PM E-Drive scheme's subsidies per vehicle emerge, stakeholders across the EV ecosystem are hopeful that the incentives will help boost adoption rates and drive the growth of indigenous EV technologies.