Govt launches ₹10,900 cr EV subsidy scheme; fund to secure e-bus payments

New Delhi: The Centre on Wednesday announced a ₹10,900 crore electric vehicle subsidy scheme, the PM E-Drive, marking the third phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) policy which has subsidized the purchase of over 1.6 million electric vehicles in India since 2015.

The new scheme will aim to boost adoption of electric buses, and brings the curtains down subsidies for electric and hybrid cars. The PM E-Drive scheme will give demand incentives to deploy 14,028 electric buses, demand for which will be aggregated across nine major cities by Convergence Energy Solutions Ltd (CESL), a stare-run company. With a ₹10,000 subsidy per kwh of battery capacity for each bus at a total outlay of ₹ ₹4,391 crore, public transport buses form the largest segment of the subsidy outlay.

The E-Drive scheme will also aim to develop an extensive charging infrastructure.

Apart from electric buses, ₹2,679 crore will be set aside to subsidize 2.48 million electric two-wheelers and 316,000 electric three-wheelers.

Additionally, ₹500 crore each has been earmarked for electric trucks and hybrid ambulances, aiming to drive EV adoption in critical service sectors and the commercial vehicle segment for the first time.

“For ambulances, we are going to give incentives to hybrids because we need total reliability in the vehicles,” Ashwani Vaishnav, Union Minister for information and broadcasting said at a Cabinet briefing.

For trucks, the scheme will offer incentives only to those who have a scrapping certificate from vehicle scrapping centres approved by the road ministry.

While FAME-II extended incentives for electric cabs, the Electric Mobility Promotion Scheme (EMPS) that temporarily replaced it did not. The E-Drive scheme skips electric cars entirely, in an upset for Tata Motors Ltd, India's largest electric car maker that had vigorously pushed for subsidizing electric cabs in the new scheme. Mint had reported in April that electric four-wheelers used in commercial fleets such as taxis were likely to miss out on subsidies under the scheme.

Charging infrastructure development also receives a major push, with ₹2,000 crore to support the installation of 22,100 fast chargers for e-four-wheelers, 1800 fast chargers for e-buses and 48,400 fast chargers for e-two-wheelers and three-wheelers in select cities with high levels of EV penetration. In July, Mint had reported about the government's plan to set aside ₹2,000 crore to expand charging infrastructure, critical to support the growing EV ecosystem.

In addition to the subsidies, the government also announced a payment security mechanism fund (PSMF) of ₹3,435 crore for 38,000 electric buses, which will reduce financial risks for bus operators and promote the electrification of public transportation networks.

Digital vouchers for customers

“MHI is introducing e-vouchers for EV buyers to avail demand incentives under the scheme. At the time of purchase of the EV, the scheme portal will generate an Aadhaar authenticated e-Voucher for the buyer. A link to download the e- voucher shall be sent to the registered mobile number of the buyer”, a release by the Ministry of Heavy Industries said. Mint had reported on September 8 that the government is looking to put its mark on its EV subsidy scheme, to make the role of the Central government funds in making EVs affordable more affordable to the buyer.

“This e-voucher will be signed by the buyer and submitted to the dealer to avail demand incentives under the scheme. Thereafter, the e-Voucher will also be signed by the dealer and uploaded on the PM E-DRIVE portal. The signed e-voucher shall be sent to the buyer and dealer through an SMS. The signed e-voucher will be essential for OEM to claim reimbursement of demand incentives under the scheme”, the MHI release explained.

“This forward-thinking initiative reflects the government's unwavering support for India's transition to electric mobility, fostering innovation and investment within the sector. We believe this scheme will not only enhance the growth of the EV ecosystem but also strengthen India's leadership in the global movement towards environmental sustainability,” Shailesh Chandra, president of SIAM said.