 "EV, Electric Car")
The Central government has decided to restore the subsidy for cargo electric three wheelers (e-3Ws) for the remaining part of financial year 2025, but with a reduced rate. The Ministry of Heavy Industries (MHI) had put a halt on the subsidy after the annual targets were met for the current fiscal year.
The subsidy, which was earlier set at Rs 50,000 per vehicle, has now been halved to Rs 25,000. Subsidies under the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) are being given to promote local manufacturing of electric vehicles. Industry had requested to extend support for electric three-wheelers from next year’s budget.
In a notification issued last week, the ministry had stated that no incentives would be provided for vehicles sold after the first 80,546 units. However, after a meeting held on November 19, it was decided to draw from the FY26 subsidy allocation to continue offering incentives in FY25, albeit at the proposed FY26 maximum limit of ₹25,000.
“The plan is to continue offering the subsidy, but at a reduced rate of Rs 25,000 per vehicle,” said an official privy to the development.
“To achieve this, we will need to draw from the budget allocated for FY26 under the scheme.”
In this latest decision, MHI has decided that the vehicles registered on the VAHAN portal from November 8, 2024, onwards will be eligible for a reduced incentive of Rs 2,500 per kWh, capped at Rs 25,000 per vehicle. This change impacts the 1,24,846 e-3Ws L5 initially slated to benefit from the FY26 subsidy allocation.
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“The vehicles registered beyond the cut-off date of November 7, 2024, will now receive the reduced incentive, which was originally earmarked for FY26,” the ministry stated in its note. This move ensures that the subsidy remains available for a larger number of vehicles, addressing industry concerns over the sudden cessation of incentives.
For FY25, a total allocation of Rs 403 crore was made to support 80,546 e-3Ws L5, while Rs 312 crore was reserved for 1,24,846 units in FY26. As of November 7, 2024, sales had reached 79,974 units, nearing the current fiscal’s cap. Vehicles sold beyond the limit of 80,546 units in FY25 will not qualify for incentives under the original allocation.
By reallocating the FY26 budget to support vehicles sold after November 8, 2024, the ministry aims to strike a balance between maintaining momentum in EV adoption and adhering to fiscal limits.
The maximum subsidy under the PM E-Drive scheme has been slashed by around 55 per cent, now capped at Rs 50,000 per vehicle, down from over Rs 1.11 lakh offered earlier under the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME) scheme. In its second year, the subsidy is set to decrease further, with a cap of Rs 25,000 per vehicle.
This marks another step in the Centre’s gradual reduction of incentives across its last three EV subsidy schemes, reflecting a shift in policy as the government aims to balance support for the electric vehicle market with fiscal sustainability.
After FAME-II expired on April 30, the ministry introduced the Electric Mobility Promotion Scheme (EMPS) 2024 with Rs 500 crore as a bridging measure, further reducing incentives to Rs 10,000 for electric two-wheelers and Rs 50,000 for electric three-wheelers.
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