In a significant push to accelerate clean mobility and reduce the country’s heavy dependence on imported crude oil, the Indian government is planning to bolster subsidies for electric two-wheelers under the flagship PM E-Drive scheme.
According to a report by Mint published on Monday, citing three people aware of the matter, the Ministry of Heavy Industries is preparing to seek additional budgetary support to extend and strengthen incentives for electric two-wheelers (e-2Ws) as the current scheme nears its conclusion.
The ₹10,900 crore PM E-Drive scheme, launched in 2024, initially allocated ₹1,772 crore specifically for subsidizing electric two-wheelers until the end of fiscal year 2026 (FY26). When the scheme was introduced, the government targeted subsidizing around 2.47 million e-2Ws. As of May 24, 2026, it had already supported approximately 2.35 million vehicles, coming very close to the target.
The scheme provided incentives of ₹5,000 per kWh of battery capacity in the first year, tapering to ₹2,500 in the second year. Despite strong uptake, sales momentum prompted an extension of the scheme until the end of July 2026 following demands from the auto industry.
Officials are now considering further extensions backed by fresh funding to sustain the momentum in e-2W adoption.
India imports a vast majority of its crude oil requirements, making the economy vulnerable to global price volatility and geopolitical risks. Promoting electric vehicles, particularly in the two-wheeler segment—which dominates Indian roads—is seen as a practical and high-impact strategy to curb fuel consumption, improve energy security, and reduce the current account deficit.
Electric two-wheelers offer an accessible entry point for mass adoption due to lower upfront costs compared to four-wheelers, shorter average trip distances in urban and semi-urban areas, and improving battery economics. Government support through subsidies helps bridge the price gap with conventional internal combustion engine vehicles, making EVs more attractive to price-sensitive consumers.
This renewed focus on e-2Ws aligns with India’s larger goals under the PM E-Drive initiative, which also supports electric three-wheelers, charging infrastructure, and other components of the EV ecosystem. Sustained subsidies are expected to:
- Encourage manufacturers to scale production and invest in local supply chains.
- Drive down battery and vehicle costs through higher volumes.
- Contribute to lower urban pollution and greenhouse gas emissions.
- Support employment in the emerging EV manufacturing and services sector.
Industry stakeholders have welcomed the potential move, as the phasing out of incentives had raised concerns about possible price hikes of up to ₹5,000 per vehicle, which could dampen demand.
While the policy direction is positive, experts note that long-term success will depend on complementary measures such as expanding charging infrastructure, ensuring affordable financing, and maintaining policy stability. Battery technology advancements and indigenization of critical minerals will also play a crucial role in making EVs viable without perpetual subsidies.
The government’s decision to “double down” on e-2W incentives signals a clear commitment to electric mobility as a cornerstone of India’s energy transition strategy. Further details on the quantum of additional funding and the exact extension period are expected in the coming weeks as formal proposals are finalized. This development comes at a time when global oil prices remain a concern and domestic fuel demand continues to grow, underscoring the urgency of building a robust EV ecosystem in the world’s largest two-wheeler market.
