Synopsis: This article explains the Government subsidies that are available for EV’s. Take a look at how much you can save through these schemes on purchase of Electric Vehicles.
India has been constantly pushing toward sustainable mobility and with years of initiative it has reached a great milestone. The combination of national and state-level policies encourages the adoption of Electric Vehicles (EVs).
The focus has recently shifted from the FAME-II scheme to its successor programs with a strong emphasis on public transport, commercial vehicles, and local manufacturing. Continue reading to learn more about all the EV subsidy programs and financial benefits.
FAME India Scheme (FAME – E-DRIVE )
The nationwide scheme FAME – Faster Adoption and Manufacturing of Hybrid and Electric Vehicles program is India’s primary EV incentive scheme.
FAME II (2019–March 2024)
- It provided subsidies for electric two & three-wheelers, e-buses and fleet-use electric cars.
- The incentives were linked to battery capacity up to ₹15,000/kWh initially (40% ex-factory cap) then revised to ₹10,000/kWh (15% cap) from April 2023
- Over 10 lakh EVs were subsidized under FAME II
Electric Mobility Promotion Scheme (EMPS) 2024 (April 2024–September 2024)
- A brief middle scheme of ₹500 crore initial outlay + extension that provided continuity for e-2W and e-3W subsidies after FAME-II ended. This scheme is now subsumed under PM E-DRIVE.
PM E-DRIVE (October 2024–March 2026, Successor Program)
- The successor of FAME was launched in October 2024 with a ₹10,900 crore outlay.
- Supports 24.79 lakh e-2Ws, 3.16 lakh e-3Ws, 14,028 e-buses, e-ambulances, and e-trucks; plus ₹2,000 crore for charging infra
- E-2Ws receive ₹5,000/kWh (capped ₹10,000 FY24-25); halved to ₹2,500/kWh (₹5,000 cap) from FY25-26
- E-3Ws receive ₹5,000/kWh (capped at ₹50,000 for L5 category).
- The scheme prioritizes commercial and public transport vehicles
Note: FAME subsidies discontinued for new two-wheeler purchases post-March 2024 (covered by EMPS/PM E-DRIVE). PM E-Drive does not cover private-use electric cars. State subsidies and GST benefits continue.
PM-eBus Sewa Scheme (2023–2030)
This stays as one of the major initiatives which supports a number of 10,000 electric buses in 169 cities.
Benefits:
- Central funding (₹57,613 crore outlay) for e-bus procurement/operations
- Infrastructure funding for depots and charging systems
- Aims to reduce urban emissions and noise pollution via public transport
Production Linked Incentive (PLI) Scheme for EVs & Batteries
India’s PLI programs incentivize manufacturers to encourage local EV production.
a) PLI for Auto & EV Components
Total outlay: ₹25,938 crore. This supports EV manufacturers, component makers, and new technology auto companies.
b) PLI for Advanced Chemistry Cell (ACC) Batteries
Total outlay: ₹18,100 crore. This supports larger battery manufacturing for EVs. Improves energy density and reduces vehicle cost for end consumers.
These PLIs reduce overall EV production cost, which translates into lower retail prices over time.
GST Reduction on Electric Vehicles
The government offers a massive tax incentive to make EVs more affordable:
| Category | GST Rate |
|---|---|
| Electric Vehicles | 5% |
| EV Chargers/Charging Stations | 5% |
| Petrol/Diesel Vehicles | 18% + cess |
This GST concession alone reduces EV purchase prices significantly, especially for four-wheelers.
Also Read: Best Govt Schemes for Senior Citizens in India for Healthcare, Financial Support and More
State-Level EV Subsidies & Incentives (2025)
Several states offer their own EV policies with subsidies over and above national schemes. Incentives differ across states, but typically include:
- Direct purchase subsidies (varies; e.g., ₹5,000–₹20,000 for 2Ws in active states).
- 100% Road tax exemption
- 100% Registration fee waiver
- Scrappage incentives
- Charging infrastructure subsidies
Scrappage Policy Benefits for EV Buyers
Under the 2021 Vehicle Scrappage Policy (updated 2025), states offer benefits when switching from old petrol/diesel to EV:
- Scrappage cash incentive (4-6% vehicle value).
- Either waived/reduced registration fees + up to 25% road tax rebate.
- Manufacturer’s discount (about 5% on new vehicle).
Corporate & Fleet Incentives
Businesses and startups benefit through:
- GST input credits on commercial EV purchases.
- Faster depreciation (40%) on EVs used for business.
- Incentives for EV charging infrastructure in commercial buildings.
Conclusion
The country’s electric mobility domain is growing at a tremendous speed. The combination of national schemes like PM E-DRIVE, state-wise EV policies, GST reductions, manufacturing incentives, and tax benefits play a huge role in the growth.
While some direct subsidies like those especially for two-wheelers have reduced over time and it is indeed a bummer. However, supportive policies like road tax exemptions, zero registration fees, and state subsidies continue to make EVs increasingly affordable.
Written by Kenbi Riba
