NEW DELHI - The government has extended demand incentives for electric two-wheelers under the PM E-Drive scheme until March 31, 2028, and increased the allocation for the segment by Rs 1,000 crore, according to a notification issued by the Ministry of Heavy Industries.
The revised allocation is now Rs 2,767 crore, up from Rs 1,772 crore earlier. The government has also raised the maximum number of electric two-wheelers eligible for support to 45,79,120 under the scheme.
This extension gives electric two-wheeler manufacturers a longer subsidy window, as the government had earlier extended support for the segment only until July 31, 2026.
Under the revised scheme, the subsidy for electric two-wheelers registered from April 1, 2025, to March 31, 2028, will remain at Rs 2,500 per kilowatt-hour of battery capacity, subject to a maximum of Rs 5,000 per vehicle. The maximum ex-factory price of an electric two-wheeler eligible for the incentive remains Rs 1.5 lakh.
The incentive is capped at the specified amount or 15 per cent of the ex-factory price of the electric two-wheeler, whichever is lower.
The incentive in financial year 2024-25 was Rs 5,000 per kWh, capped at Rs 10,000 per vehicle. The subsidy was reduced from April 1, 2025, as the government sought to scale back the level of support for electric vehicles.
The latest amendment also increases the overall outlay of the PM E-Drive scheme to Rs 11,900 crore. The scheme is being implemented from April 1, 2024, to March 31, 2028, to promote electric vehicle adoption, set up charging infrastructure and develop the electric vehicle manufacturing ecosystem in India.
The government had initially launched the scheme in October 2024 with an overall outlay of Rs 10,900 crore. It was originally planned as a two-year programme, with the scheme's initial end date set for March 31, 2026. The overall tenure was subsequently extended, while subsidies for individual vehicle categories were subject to separate timelines.
The latest notification brings electric two-wheelers back into the subsidy window until the end of the scheme in March 2028. It also sets December 31, 2027, as the last date for submitting claims to the Ministry of Heavy Industries or the implementing agency, as no payments will be made after March 31, 2028.
The scheme remains fund-limited, however. The government said the total payout will be restricted to the Rs 11,900-crore scheme outlay. If funds allocated to the scheme or any of its components are exhausted before March 31, 2028, the relevant component can be closed and no further claims will be entertained.
The extension comes as electric two-wheeler sales have grown sharply in recent years. According to Vahan data, electric two-wheeler sales increased to 1.46 million in financial year 2026 from 252,787 in financial year 2022.
The PM E-Drive scheme covers electric two-wheelers, three-wheelers, buses, trucks and electric and hybrid ambulances, besides supporting charging infrastructure. The subsidy for registered electric three-wheelers in the L5 category had already been closed after the segment achieved its sales target in December 2025.