Heavy industries ministry seeks to shift ₹4,891 cr allocation for e-trucks, e-buses to next year's budget
Challenges in component localisation approvals and supply chain disruptions have hindered the disbursal of incentives, with no models of e-trucks and e-buses receiving government approval yet.
New Delhi: The ministry of heavy industries has asked the finance ministry to shift the allocation for financial incentives to encourage the purchase of e-trucks and e-buses to next year’s budget, according to two people aware of the development.
No sops have been disbursed so far, and the government has now extended the incentive scheme by two years till FY28, the people said, speaking on condition of anonymity. The extension of the scheme comes as e-truck manufacturers await approval of component localisation norms, while a tender for e-buses has been delayed.
“Budget consultations for MHI with the finance ministry happened in October, a few weeks ago. MHI has asked that the outlay for e-trucks and e-buses under PM E-Drive (scheme) be shifted to the next year, and accordingly map the revised estimates," one person said. This is because most disbursals are likely to be done in FY27, the person said.
The government had allotted ₹4,391 crore towards e-buses and ₹500 crore for e-trucks under PM E-Drive, the e-vehicle adoption scheme, which was set to run for two years from FY24 to FY26. The plan was to put 14,028 e-buses and 5,643 e-trucks on the road and disburse the entire amount – ₹4,891 crore – by FY26.
But in August, the government extended the scheme for e-trucks and e-buses after no disbursals were made in these vehicle segments. The cut-off date for other vehicle segments – electric two- and three-wheelers – remained the same.
“OEMs (original equipment manufacturers) have faced challenges in meeting the localisation criteria this year. But the total allocation for each vehicle segment will remain the same," the second person said.
Email queries to the ministry of heavy industries and the finance ministry on 13 November remained unanswered.
Heavy costs
The PM E-Drive scheme was created to reduce the cost of buying and using electric vehicles for consumers, with the government paying a part of the price. E-vehicles typically cost at least twice as much as fossil-fuel vehicles, although electric trucks and buses cost two to three times as much as their diesel equivalents.
An electric bus costs ₹1-1.25 crore or more, while a diesel bus may cost ₹25-50 lakh, depending on size. Heavy electric trucks, above 12 tonnes in gross vehicle weight, are priced at ₹1-1.5 crore compared with ₹25-50 lakh for their diesel counterparts.
Incentive disbursals for e-buses and e-trucks have faced hurdles. Truckmakers have not received localisation approvals four months after the guidelines on components were published, and busmakers have raised reservations about the country’s largest e-bus tender for 10,900 e-buses, which has been delayed by at least three months.
“OEMs have faced a tough time this year with supply chain disruptions, and given that India’s supply chains are still growing," said Amit Bhatt, India director of the International Council on Clean Transportation, referring to the challenges of making components locally. “This could give a little more time to OEMs to meet localisation standards."
Cutoffs for imports
Localisation norms under the PM E-Drive scheme are laid out in the phased manufacturing programme, which lists the components that manufacturers can import until a cutoff date.
The cutoff date for the import of e-truck components such as heating, ventilation and air-conditioning systems, electric compressors for brakes, charging inlets and battery management systems was 1 September 2025, with imports of some parts allowed till 1 March 2026.
The government relaxed localisation rules related to rare earth magnets for e-trucks and e-buses on 30 September, allowing manufacturers to import traction motors laden with rare earth magnets till supplies resumed and still claim incentives.
Till date, no e-truck or e-bus model has received the green signal from the government’s testing agencies, a prerequisite for incentives under the PM E-Drive scheme.
In India’s e-bus market, about 3,500 units are sold each year. The e-truck market is still nascent, with about 400 heavy trucks – only those with a gross value weight over 3.5 tons are eligible under the scheme – sold this year.
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