PM E-DRIVE SCHEME: SUCCESS, FEATURES, CHALLENGES AND WAY FORWARD

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Picture Courtesy:   thehindu 

Context

The PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme supported the sale of over 22.12 lakh electric vehicles (EVs) as of January 2026.

What is PM E-DRIVE Scheme? 

The initiative was launched in 2024 with a budget of ₹10,900 crore, is designed to accelerate the adoption of electric vehicles (EVs) and establish a robust domestic manufacturing base.

Managed by the Ministry of Heavy Industries (MHI), the scheme replaces previous programs like FAME-II and is effective until March 31, 2026 (with certain components like e-trucks and e-buses extended to 2028). 

Key Components & Subsidies

The scheme provides financial support through two primary mechanisms: 

• Demand Incentives (Subsidies): Targeted at reducing the upfront cost for consumers of specific EV categories:
• Electric 2-Wheelers (e-2Ws): Supports approximately 24.79 lakh vehicles for both commercial and private use. (Source: PIB)
• Electric 3-Wheelers (e-3Ws): Supports around 3.16 lakh vehicles, primarily for commercial use (L5 category, e-rickshaws, and e-carts).
• Electric Ambulances & Trucks: Allocated ₹500 crore each to promote green emergency services and logistics.

• Grants for Infrastructure & Modernization:
• Electric Buses (e-Buses): ₹4,391 crore allocated to deploy 14,028 e-buses in major cities through state transport undertakings. (Source: PIB)
• Charging Infrastructure: ₹2,000 crore to install 72,300 public fast chargers. (Source: AIR)
• Testing Agency Upgradation: ₹780 crore to modernize vehicle testing labs for emerging EV technologies. 
• 

Eligibility & How it Works

Advanced Batteries: Only vehicles equipped with advanced battery technology (like Lithium-ion) qualify; lead-acid models are excluded.

E-Voucher System: To ensure a paperless and transparent process, the scheme introduces Aadhaar-authenticated e-vouchers. 

• At the time of purchase, a dealer generates this voucher on the PM E-DRIVE portal, which provides an instant price reduction for the buyer.

Local Manufacturing: To support Aatmanirbhar Bharat, Original Equipment Manufacturers (OEMs) must follow a Phased Manufacturing Programme (PMP) to ensure domestic value addition.

Exclusions: Private electric four-wheelers (cars) are excluded from demand incentives, as the focus is on mass mobility and commercial transport. 

What is the significance of the PM E-DRIVE Scheme?

Combating Vehicular Pollution

Transport sector contributes around 14% of India’s CO2 emissions. Promoting zero emission EVs is essential for improving air quality in cities. (Source: Bureau of Energy Efficiency)

Reducing Import Dependency

India imports over 85% of its crude oil, making the shift to EVs crucial for boosting energy security and reducing the Current Account Deficit and forex outflow.

Meeting Climate Commitments

The scheme is a key tool for achieving India's ambitious goal of reaching Net Zero emissions by 2070, a commitment made at COP26.

Bridging the Cost Gap

The upfront cost of an EV is currently 20-30% higher than a comparable Internal Combustion Engine (ICE) vehicle; government incentives are essential to achieve mass affordability until price parity.

Challenges

Charging Infrastructure Deficit

Actual installation of charging stations, especially in Tier-2 and Tier-3 cities, has been slow due to challenges in land acquisition and grid connectivity. 

Supply Chain Vulnerabilities

India is heavily dependent on imports for key battery minerals like Lithium, Cobalt, and Nickel. India imports nearly 70-80% of its lithium-ion cell requirements, primarily from China.

Financing Hurdles

The high upfront cost of EVs remains a major barrier. The demand for including EVs under Priority Sector Lending (PSL) has not been fully implemented by all banks.

Grid Stability

The Central Electricity Authority (CEA) has raised concerns that unmanaged mass charging could destabilize local power grids. The rollout of smart charging solutions and Time-of-Day (ToD) tariffs is inconsistent across states.

Way Forward

Enhance Local Manufacturing

Enforce the Phased Manufacturing Programme (PMP) to build a domestic supply chain for batteries and other critical components, reducing import dependency.

Develop a Circular Economy

Create a robust policy for battery recycling and urban mining to manage end-of-life batteries and recover valuable materials, as recommended by NITI Aayog.

Promote Smart Charging

Integrate EVs with the power grid through "Smart Charging," which encourages charging during off-peak hours or when renewable energy generation is high, thus balancing the grid and reducing emissions.

Learning from Global Best Practices 

• Norway Model: Adopt a stronger "polluter pays" principle by increasing taxes on polluting vehicles and providing incentives for EVs, which creates a more compelling economic case for switching.
• Chinese Model: For successful battery swapping, especially for commercial vehicles, the Bureau of Indian Standards (BIS) must mandate standardized, interoperable battery packs to establish a viable "Battery-as-a-Service" (BaaS) market.

Conclusion 

The proposed "PM e-DRIVE 2.0" should transition from a subsidy-driven to an ecosystem-led growth model, focusing on heavy vehicles, battery standardization, grid modernization with solar-to-EV integration, and mandated urban EV charging infrastructure to achieve Net Zero 2070 goal.

Source: PIB