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

Of around 649,000 electric scooters sold in April-October 2025, subsidy was claimed for about 329,000 or about 51% of the units, according to data reviewed by Mint. That compares with consumers utilizing benefits on 89% of about 948,000 battery-powered units sold in FY24 and 93% of around 727,000 in FY23.

Changes in the phased manufacturing programme (PMP) guidelines—covering localization requirements--have “disproportionately impacted mid-sized and small original equipment makers (OEMs), making it slightly more time-consuming for them to qualify under the scheme", said Alok Ray, director-public affairs at industry lobby Society of Manufacturers of Electric Vehicles.

So, consumers were not claiming subsidies as EV makers were outside the domain of the incentives, Ray said. “Continuous changes in subsidy schemes like FAME II, EMPS, and PM E-drive scheme have made it challenging for OEMs to secure certification from testing agencies within tight timelines."

A query emailed to the ministry of heavy industries remained unanswered.

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

EVs account for 7.3-7.5% of all vehicles sold in the country so far, say industry experts. The country—which recorded overall vehicle sales of 24.6 million in FY24—targets 30% EV adoption by 2030, tying in with the nation’s pledge to cut emissions and reduce costly fossil fuel imports. 

To push EVs, the government has subsidized sales since 2015, first under the two iterations of the flagship Faster Adoption and Manufacturing of Electric (and Hybrid) or FAME till April this year, when it was replaced by the Electric Mobility Promotion Scheme (EMPS). Then the Prime Minister’s E-drive scheme, launched on 1 October this year, subsumed the EMPS.

Which means, India had three different EV subsidy schemes — the second iteration of FAME, EMPS, and the PM E-drive scheme—in the same fiscal FY25. Moreover, the government has pruned benefits since the first set of subsidies.

Under the first iteration of FAME, low-speed electric two-wheelers (e2Ws) with conventional battery got a subsidy of ₹7,500 each; high-speed e2Ws with conventional battery received a benefit of ₹9,400; and low-speed e2W with an advanced battery got a subsidy of ₹17,000.

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

FAME-II ran into controversy with the government alleging misuse by some manufacturers. In 2023, the subsidy was slashed from ₹15,000 per kilowatt-hour (kWh), which could be up to 40% of the vehicle's price, to ₹10,000 per kWh capped at 15% of the vehicle's showroom price.

PM E-Drive provides a corpus of ₹10,900 crore, of which ₹1,064 crore would be used for e2W subsidies, and ₹511 crore for electric three-wheelers till the end of this fiscal year.

Consumers can buy e2Ws at a ₹10,000 discount in FY25, and a ₹5,000 discount in the next fiscal, and manufacturers can claim reimbursement from the government. According to government officials, the reduction in subsidies in FY26 is in line with the global tapering of direct benefits to consumers buying EVs.

"Whether customers have availed of subsidy is a function of whether the EV they have chosen qualified for the subsidy in the first place," said Kunal Mundra, founder and CEO, Electrifi Mobility, which provides financing solutions for EVs. “And secondly, if the consumer and dealer were aware of the process for availing of this subsidy."

Also read | FAME-II fiasco fuels electric two-wheeler consolidation

To be sure, the existing adoption of battery-powered vehicles in India is led by electric three-wheelers (e3Ws).

According to data released by the heavy industries ministry in August 2023, more than half of all three-wheelers sold in the country since 2018 were battery-powered, while a mere 5.28% of all two-wheelers and 1.99% of all four-wheelers were electric.

While the government has offered subsidies to buyers, it also offered production-linked incentives to manufacturers of EVs and makers of advanced chemistry cells.

The ministry of heavy industries launched a scheme to promote local manufacturing of electric cars in March 2024. While the scheme initially found no takers, a recent report in the Economic Times said major automakers including Hyundai Motor, Skoda-Volkswagen, and Toyota Motor are likely to apply under the scheme.

Mundra of Electrifi Mobility, however, said that subsidies alone are not enough to lure buyers in the long term.

And read | Subsidy cut: A ride into uncertainty for electric two-wheelers?

“Consumers urgently need a more robust infrastructure and significantly better and cheaper access to financing and both these enablers need immediate acceleration. In fact, the gradual reduction of subsidies could be beneficial in encouraging manufacturers to innovate and improve value engineering," he said. “However, without adequate financing support and a stable regulatory environment, obtaining considerable market penetration may be difficult."