Budget FY27: Allocation estimate for PM E-Drive Scheme at Rs 1,500 Cr

The Union Budget for 2026-27 (FY27) has allocated Rs 1,500 crore for the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-Drive) scheme under the Ministry of Heavy Industries, which has been a key driver of electric vehicle demand in the country. 

Budget documents show that the allocation for the PM E-Drive scheme stood at Rs 993 crore in FY25. In FY26, the budget estimate was set at Rs 4,000 crore, but this was revised down to Rs 1,300 crore. 

The Rs 10,900-crore PM E-Drive scheme, which replaced the earlier Faster Adoption and Manufacturing of Electric Vehicles (FAME) programme, was launched on October 1, 2024. It provides subsidies on the purchase of electric two-wheelers, electric three-wheelers, electric trucks and buses, as well as electric ambulances, and for setting up charging infrastructure.

The scheme is aimed at accelerating EV adoption by lowering upfront costs for consumers through direct demand incentives.

Of the total outlay, Rs 2,679 crore has been earmarked for electric two- and three-wheelers, Rs 4,391 crore for electric buses, and Rs 500 crore each for electric trucks and electric ambulances. Rs 2,000 crore has also been allocated for the development of electric vehicle public charging infrastructure across the country.

As of December 30, a total of 21.24 lakh electric vehicles have been incentivised under the scheme. The programme has already met its target for electric three-wheelers in the L5 category ahead of schedule. Subsidies for e-3W (L5) vehicles was closed after achieving the target of 2.88 lakh units on December 26, 2025.

Sales data up to December 30, 2025, show that subsidies were given to 18.40 lakh electric two-wheelers against the scheme’s target of a total of 24.79 lakh units. 5,267 units of e-rickshaws and e-carts were incentivised against a target of 39,034 units.

Recently, the government extended the PM E-Drive scheme by two years, taking its tenure to March 2028. However, subsidies for electric two-wheelers and electric three-wheelers are scheduled to be phased out by March 31, 2026.

The operational guidelines for setting up public EV charging infrastructure under the scheme were released only recently, and incentive disbursals for this are yet to begin. The scheme targets the installation of 22,100 fast chargers for four-wheelers, 1,800 chargers for electric buses, and 48,400 chargers for two- and three-wheelers, backed by the Rs 2,000-crore allocation.