India’s clean mobility drive hit as electric two-wheeler subsidies miss target in FY25

“The target was to incentivise 10.64 lakh (1.064 million) electric two-wheelers in the last fiscal, and EV sales have risen in that period," said a senior government official, requesting anonymity. According to data compiled by the ministry of heavy industries, the Centre has managed to attract about 793,000 claims for subsidies on its portal in this period, completing about 75% of its target.

“Some claims for subsidies are still pending with the government, and the process will be completed soon," the official cited above added.

An email query to the ministry of heavy industries, the nodal ministry for the PM E-drive scheme, sent on Friday, 25 April, did not elicit a response till press time.

Experts said the shortfall, which comes at a time when the adoption of e2Ws in the country is hovering around a modest 6%, may be attributed to multiple factors. That would include low subsidy amounts as well as a tapering mechanism for the subsidies over the duration of the scheme, in which ₹1,772 crore or 16% of the outlay was allocated towards incentivising e2W sales.

Also read | Hydrogen highways: India gears up for nationwide fuelling network of the clean mobility gas

Mint earlier reported in December 2024 that constant policy tweaks had dragged subsidy claims of e2Ws to a three-year low.

Alok Rai, director of public affairs at the Society of Manufacturers of Electric Vehicles (SMEV), an industry association, said subsidy disbursals under the PM E-drive scheme have not always been within a reasonable and logical timeline, even though the situation has improved due to the efforts of the heavy industry ministry and Industrial Finance Corporation of India, the project management agency for the scheme (IFCI). 

“Many manufacturers are still waiting for their claims to be approved and disbursed under the recent scheme," he said, adding that some EV makers are also not claiming subsidies as the amount is nominal. “To go through the hassle of testing a vehicle and reaching sales targets for about ₹5,000-10,000 may seem like a challenge for them," he said.

Further, Rai highlighted that while the government had completed 75% of its incentive target, India’s EV sales for FY25 would show a worse picture. 

Read this | Policy tweaks drag sale of subsidized electric two-wheelers to three-year low

EV registration data from the government's Vahan portal dashboard showed that 1.15 million e2Ws were sold and registered in India in FY25–making the number of subsidy claims a little over two-thirds of total sales. “In 2021, this figure was about 90%," said Rai, whose industry association represents many large and small EV makers.

To be sure, the registration of 1.15 million e2Ws in FY25 showed a 21.2% rise over approximately 948,000 in FY24. In FY23, a little over 728,000 e2Ws were registered.

Shifting gears of subsidy

The PM E-drive scheme marked a change in policy by the Indian government for incentivising the adoption of zero-emission vehicles among consumers. Previous schemes such as the two iterations of FAME, which ran for a decade from 2015 to 2024, focused on incentivising consumers to purchase electric two- and three-wheelers, as well as cars for commercial operations in fleets. FAME stands for Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles.

In contrast, the PM E-drive scheme allocated nearly 40% of its outlay– ₹4,391 crore–towards incentivising the adoption of electric buses in intra-city travel. 

As per the scheme, the government is set to spend this amount towards subsidising the prices of 14,028 e-buses in nine cities with a population above 4 million. These cities are New Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Surat, and Pune.

Also read | Slashed subsidies to cause e-two-wheeler sales to ebb

This move also aligned with the Economic Survey for FY25 penned by chief economic advisor V. Anantha Nageswaran, which highlighted the need for India to reduce carbon emissions in its public transportation. 

“Given India’s vast size and limited land availability, public transportation is a more efficient alternative for viable energy transition. Therefore, national-level policies and local nudges must promote and facilitate its use, going beyond the focus on tail-pipe emissions of private transportation choices," Nageswaran said in the FY25 economic survey.

The PM E-drive scheme, which is set to run for two fiscal years–FY25 and FY26–also identified sunrise sectors such as e-trucks and e-ambulances to be incentivised with subsidies, while simultaneously stopping incentives for electric cars.

Another crucial difference between the PM E-drive scheme and previous schemes is the tapering of subsidies. Under the PM E-drive scheme, subsidies for each vehicle category would be halved in FY26, compared with those provided in FY25. For instance, in FY25, the government would provide a subsidy incentive of ₹10,000 for every e2W unit. In FY26, that would be halved to ₹5,000.

But progress has been slow. Under the scheme, the government said it would provide subsidies for electric bikes and scooters, three-wheeler commercial vehicles, buses, trucks, and ambulances. As per the scheme, automakers have to strictly comply with the phased manufacturing programme (PMP), which lists the components they are allowed to import.

And read | Electric two-wheelers weigh the cost of subsidy cuts

But the PMP requirements for e-trucks and e-ambulances were not notified along with the scheme. While the PMP for e-buses was notified in March 2025–about five months after the PM E-drive was announced–the PMPs for e-trucks and e-ambulances have not been notified yet.

As a result, no incentives have been disbursed for electric buses, trucks, and ambulances to date.