India Plans to Double Subsidies for Electric Two-Wheelers Under PM E-Drive Scheme

The government is planning to double down on subsidies for electric two-wheelers as a central scheme to support clean mobility, the Mint reported on Monday, citing three people aware of the matter.

As per the report, the heavy industries ministry is planning to seek additional funds to subsidise electric two-wheelers under the flagship PM E-Drive scheme, at a time when India is looking to reduce its overwhelming reliance on oil imports.

The PM E-Drive Scheme had already allocated Rs 10,900 crore to subsidise electric two-wheelers till the end of fiscal year 2026, which was further extended till the end of July, following demands from the auto industry.

According to one of the sources cited by Mint, a policy change is indeed in the works. “The amount of funds, however, is yet to be decided,” the person told the publication on condition of anonymity.

With the launch of the PM E-Drive Scheme in 2024, the government had aimed to subsidise 2.47 million electric two-wheelers. As of 24 May this year, 2.35 million vehicles were subsidised, Mint reported, citing the scheme's dashboard showed. It offered subsidies at Rs 5,000 per kilowatt-hour of battery capacity in the first year, and Rs 2,500 in the second year.

“This was being discussed for the past two months or so. The ministry has been looking at which schemes can be extended, and the electric two-wheeler segment under the PM E-Drive could be part of this plan,” another source told Mint.

If the plan is executed, it might require a change in budgeting, as the allocation for the PM E-Drive scheme in FY27 was only Rs 1,500 crore, budget documents showed.

The ongoing geopolitical issues in West Asia has evidently led to fuel price hike and volatility in crude markets. On parellel lines, India’s EV story is getting a boost. While the broader automobile market is facing a hit, ET's report shows signs of renewed traction for electric two-wheelers.

In the first half of May, electric two-wheeler registrations rose 13.5%on-year, while overall two-wheeler sales fell 5.5%. EVs are gaining share in a shrinking auto market.

“Till recently, it was held that every house should have a petrol vehicle,” Ravneet Singh Phokela, chief business officer at Ather Energy told ET. “Now, it is to have at least one EV in the house."

Experts indicate that EX is becoming the second vehicle in multi-car households, not replacing the primary family cars.

“For a household that already has one petrol vehicle, the second vehicle is increasingly an EV scooter for the daily school run, office commute or grocery trip,” Vasudha Madhavan, founder of Ostara Advisors, an electric mobility-focused investment bank told ET. “You charge overnight, skip the petrol pump, and at roughly 30–50 paise a km, the running cost math just becomes hard to argue with."