If you’re planning to buy an electric scooter or motorcycle, it might be a good time for you, as the government of India is reported to end the purchase subsidy scheme for electric 2- and 3-wheelers after March 2026. As of now, the Indian government provides purchase incentives on EVs under the PM e-Drive scheme, which offers subsidies of up to Rs 5,000 for two-wheelers. However, the scheme has been extended for electric buses and trucks.
Why EV Subsidies Might End
According to the government and Niti Aayog, India has already spent over Rs 40,000 crore on EV incentives in the past decade through schemes like FAME I, FAME II and EMPS (Electric Mobility Promotion Scheme). Authorities now believe that the EV market has matured enough to sustain itself through better policies, improved infrastructure, and market competition, rather than subsidies.
EV Adoption Is Still Slow
The Indian government has a target of achieving over 30% penetration of EVs by 2030. But going by the current demand for EVs, the target seems difficult to meet. At present, the electric 2-wheelers make up less than 10% of India’s overall two-wheeler market. Yes, legacy players like TVS, Bajaj, Honda and Hero’s Vida are gaining traction, but the market is still dominated by 100-125cc petrol offerings that are not only affordable but also offer strong mileage. And after the recent GST 2.0 cuts, they have become even more affordable.
Also Read: Yamaha Reveals Its First EVs For India – Aerox E and EC 06
What’s Ahead?
Manufacturers have urged the government to continue the purchase incentives on EVs for a few more years to maintain the growth momentum. However, the govt has decreased the subsidies over time. The current PM eDrive scheme offers a subsidy of Rs 2,500 per kWh with a cap of Rs 5,000 per two-wheeler and Rs 12,500 per electric 3-wheeler.
Eliminating the purchase incentives will increase the costs of electric 2-wheelers by up to Rs 5,000. However, automakers are working on reducing battery costs, improving range and expanding charging infrastructure, which will eventually make EVs more affordable without subsidies. But for the time being, buyers will have to bear that added cost, which might further impact the overall sales of electric 2- and 3-wheelers.
