New Delhi plans to double down on subsidies for electric two-wheelers as a central scheme to support clean mobility draws to a close, three people aware of the matter said. The heavy industries ministry is planning to seek additional funds to subsidize electric two-wheelers under the flagship PM E-Drive scheme, at a time when India is looking to reduce its overwhelming reliance on oil imports.
The ₹10,900 crore PM E-Drive scheme had allocated ₹1,772 crore to subsidize electric two-wheelers till the end of fiscal year 2026 (FY26). When sales fell short of target, the scheme was extended till the end of July, following demands from the auto industry. The current thinking is to extend it further with fresh financial backing, at a time when Prime Minister Narendra Modi has made a call for electric mobility.
According to one of the three people cited above, a policy change is indeed in the works. “The amount of funds, however, is yet to be decided,” the person said on condition of anonymity.
The government had aimed to subsidize 2.47 million electric two-wheelers when the PM E-Drive scheme was launched in 2024. As of 24 May this year, 2.35 million vehicles were subsidized, the scheme's dashboard showed. The scheme offered subsidies at ₹5,000 per kilowatt-hour of battery capacity in the first year, and ₹2,500 in the second year.
“This was being discussed for the past two months or so. The ministry has been looking at which schemes can be extended, and the electric two-wheeler segment under the PM E-Drive could be part of this plan,” the second person said.
A shift to electric two-wheelers could help reduce India's dependence on fossil fuels. Out of 42.6 million tonnes of petrol sold in India in FY26, two-wheelers accounted for nearly two-thirds, according to data from the Petroleum Planning and Analysis Cell. Meanwhile, the electric two-wheeler sector is booming: Vahan data shows that over 11 million petrol two-wheelers were sold in India in FY26, down from 13.2 million in FY22. In the same period, electric two-wheeler sales jumped to 1.46 million from 252,787.
Queries emailed to the ministries of heavy industries and finance, and to electric two-wheeler makers Hero MotoCorp, Bajaj Auto, TVS Motor, Ather Energy and Ola Electric remained unanswered.
The plan comes at a time when almost every two-wheeler maker either has or plans to have electric models, said Amit Bhatt, India managing director of the International Council on Clean Transportation, a global think tank.
“The price difference between electric two-wheelers and their petrol counterparts still exists, even though the total cost of ownership is in favour of e-2Ws. Any subsidy that lowers the upfront cost will help accelerate adoption, especially in light of Prime Minister Narendra Modi’s comments earlier this month. However, along with demand-side incentives under the PM E-Drive scheme, it is also important to consider changes to supply-side policies, particularly through stronger electrification mandates,” said Bhatt.
If the plan is executed, it would mean a change in budgeting, as the allocation for the PM E-Drive scheme in FY27 was only ₹1,500 crore, budget documents showed. This was largely expected to be used for subsidies on electric trucks, buses, and charging infrastructure, since subsidies for electric two-wheelers and L5 category three-wheelers had been exhausted, Mint reported in December 2025.
Electric mobility has become a scalable alternative to conventional fuel vehicles in the wake of the West Asia war, as the government is stepping up to adopt zero-emission vehicles to reduce dependence on fossil fuels.
Mint reported on 21 May that state-run Convergence Energy Services Ltd, which procures electric vehicles, is reaching out to central ministries, state governments, as well as other government agencies to shift to electric cars for transportation over existing ICE vehicles under its EV-as-a-service model.