Govt Extends PM E-Drive Subsidy for E2Ws Till July; E3W to Get Incentives Till 2028

Demand subsidies for electric two-wheelers under the PM E-DRIVE scheme will be available for vehicles registered until July 31, 2026, while incentives for electric three-wheelers will continue for registrations done until March 31, 2028, according to a government notification.

The Rs 10,900-crore scheme, which provides incentives on the purchase of electric vehicles, including two-wheelers, three-wheelers, buses, trucks, and ambulances, and for setting up charging infrastructure, was launched in October 2024 and was initially supposed to expire on March 31, 2026.

While the government had last year extended the PM E-DRIVE scheme’s overall tenure to March 31, 2028, it had indicated at the time that demand incentives for electric two-wheelers and three-wheelers would be discontinued by March 31, 2026.

However, the latest amendment to the scheme has revised those timelines, extending the subsidy window for electric two-wheelers until July 31, 2026, effectively providing an additional four months of support beyond the earlier cut-off. Subsidies for electric three-wheelers, including e-rickshaws and e-carts, will now continue until March 31, 2028.

The Ministry of Heavy Industries reiterated that the scheme remains fund-limited, with an overall outlay of Rs 10,900 crore, and will close earlier if allocated funds are exhausted before the terminal date.

The incentive for electric two-wheelers was reduced to Rs 2,500 per kWh, capped at Rs 5,000 per vehicle, from Rs 5,000 per kWh, with a cap of Rs 10,000 per vehicle, effective April 1, 2025. The maximum ex-factory price eligible for subsidy support remains capped at Rs 1.5 lakh.

Similarly, incentives for electric three-wheelers have been rationalised, with support reduced from Rs 5,000 per kWh, capped at Rs 25,000 per vehicle, to Rs 2,500 per kWh, capped at Rs 12,500 per vehicle. The subsidy component for the L5 category of electric three-wheelers had already been closed in December 2025 after the segment achieved its deployment target.

The PM E-DRIVE scheme came with a target of providing demand incentives worth Rs 3,679 crore on the purchase of electric two-wheelers, three-wheelers, ambulances, and trucks, while Rs 7,171 crore has been set aside to boost the adoption of electric buses, improve public charging infrastructure, and upgrade testing infrastructure.

The target was to support 24.79 lakh electric two-wheelers, 3.16 lakh three-wheelers, and 14,028 buses and trucks, as well as 88,500 electric vehicle charging sites.

The subsidies given on the purchase of electric vehicles are instrumental in driving the early-stage adoption of electric vehicles, as incentives help in reducing the upfront cost of the vehicle. As EV adoption grows, the government has been progressively scaling back subsidies, signalling a deliberate policy shift away from fiscal dependency.

As of January 27, 2026, a total of 22.12 lakh EVs have been sold under the scheme, including 19.19 lakh e-2Ws and 2.93 lakh e-3Ws. Around Rs 1,703 crore has been reimbursed to two-wheeler and three-wheel OEMs.

The Union Budget for 2026-27 has allocated Rs 1,500 crore for the scheme. The allocation was 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 scheme has earmarked Rs 4,391 crore for the deployment of 14,028 electric buses across major urban centres, as part of the government’s push to scale up electric public transport infrastructure.

Of the total allocation, 13,800 electric buses have been sanctioned in two phases for deployment across seven cities with populations exceeding four million - Bengaluru, Delhi, Mumbai, Hyderabad, Ahmedabad, Pune, and Surat - reflecting a targeted approach focused on high-density urban mobility corridors.

Procurement activity is already underway, with tenders for 10,900 electric buses under Phase I concluded by Convergence Energy Services Ltd (CESL), while bids for the remaining 2,900 buses under Phase II were floated on January 9, 2026, signalling the next tranche of capacity addition under the programme.

The operational guidelines for setting up public EV charging infrastructure under the scheme were released only recently, and incentive disbursals for this have 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.