PM E-DRIVE Scheme: Govt Caps EV Two-Wheeler Incentive at Rs 5,000; Check New Incentive Structure | Economy News

Last Updated:August 11, 2026, 08:43 IST

Under the amended scheme, the incentive for eligible electric two-wheelers has been reduced to Rs 2,500 per kWh, subject to a maximum benefit of Rs 5,000 per vehicle.

For FY2024-25, the incentive was Rs 5,000 per kWh, capped at Rs 10,000 per vehicle.

The Ministry of Heavy Industries has revised the incentive structure under the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme, cutting the subsidy for registered electric two-wheelers (e-2Ws) for the period from April 1, 2025, to March 31, 2028.

Under the amended scheme, the incentive for eligible electric two-wheelers has been reduced to Rs 2,500 per kWh, subject to a maximum benefit of Rs 5,000 per vehicle. For FY2024-25, the incentive was Rs 5,000 per kWh, capped at Rs 10,000 per vehicle.

The revised provisions were notified by the Ministry of Heavy Industries on August 10. The incentive will apply only to electric two-wheelers with a maximum ex-factory price of ₹1.5 lakh.

The government has earmarked Rs 2,767 crore in fund support for registered electric two-wheelers under the scheme. This allocation is expected to cover a maximum of 45,79,120 vehicles. A further Rs 55 crore has been set aside for administrative expenses.

The PM E-DRIVE Scheme has an overall outlay of Rs 11,900 crore. According to the notification, if the funds allocated to the scheme or any of its individual components are exhausted before the scheme’s terminal date, the scheme or the relevant component will be closed accordingly.

The registered electric three-wheeler (L5) component has already been closed after achieving its prescribed target. The notification states that the segment was closed on December 26, 2025.

The terminal date for all components of the PM E-DRIVE Scheme remains March 31, 2028. However, claims for benefits under any component must be submitted to the Ministry of Heavy Industries or the Project Management Agency by December 31, 2027.

The notification further states that no payments will be made by the Ministry of Heavy Industries or the Project Management Agency after March 31, 2028.

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What happens if the scheme’s funds run out early?

If the funds allocated to the PM E-DRIVE scheme or any of its sub-components are exhausted before the terminal date, the scheme or the relevant sub-component will be closed accordingly.

Could this change impact electric two-wheeler prices?

The reduction in the electric two-wheeler incentive under the PM E-DRIVE Scheme, which caps the benefit at Rs 5,000 per vehicle, could lead to an increase in electric two-wheeler prices.

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