Mint Primer | India changes gears to a new EV policy focus

What did the demand-side schemes achieve?

Subsidies under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) I and II scheme, launched in 2015 and 2019 with outlays of ₹795 crores ₹11,500 crore, helped sell over 1.6 million EVs, particularly electric two-wheelers, three-wheelers and buses. The scheme also focused on developing EV charging infrastructure, further supporting the growth of the EV market. FAME II’s focus on buses and two-wheelers, which now make up 7% and close to 6.5% of their respective markets, played a significant role in making EVs affordable for consumers and boosting demand.

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What is the new scheme all about?

The PM E-Drive scheme marks a shift towards supporting public transport and commercial sectors, with a total outlay of ₹10,900 crores. Unlike FAME, which provided broad-based subsidies for electric cars and other vehicle segments, PM E-Drive targets specific sectors such as buses, with 14,028 electric buses planned for deployment. The scheme also extends support to electric trucks and hybrid ambulances, filling gaps in commercial EV adoption. Public transport electrification is a major focus, with the program aiming to create charging infrastructure and supply chain resilience for sustainable EV growth.

Why are demand-side incentives being taped?

With electric two-wheelers now making up 6% of sales, the market has become more self-sustaining, benefiting from economies of scale, localized manufacturing and falling battery costs. The idea is to avoid dependence on sops and promote a sustainable ecosystem. Supply-side incentives will ensure the market can stand on its own feet.

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How does this help India’s EV transition?

Supply-side incentives are key to building a robust EV making base in India. The production linked incentive (PLI) scheme for the auto sector, with a ₹26,000 crore outlay, and the PLI for advanced chemistry cells at ₹18,000 crore, aim to boost domestic production of critical components. The government aims to reduce India’s import dependence and lower EV costs. These incentives will also attract global investment in India’s EV ecosystem, helping it become a competitive player in the global market.

How will the new focus improve things?

Charging infrastructure will get a major boost under PM E-Drive, with ₹2,000 crore earmarked for installing 22,100 fast chargers for four-wheelers, 48,400 for two- and three-wheelers, and 1,800 for buses. This is critical for supporting the EV ecosystem in cities with high EV penetration. Public transport will also benefit from the scheme, with a payment security mechanism fund of ₹3,435 crore for 38,000 electric buses, helping reduce financial risks for operators and promoting EV adoption in public transportation.