PM EDRIVE Scheme

Context:

With the Union Budget 2025 on the horizon, electric twowheeler (e2W) players are urging the government to introduce critical policy measures and incentives to revitalise the sector. Key demands include relooking at the PM EDRIVE scheme, reduced goods and services tax (GST) rates across the entire EV ecosystem, providing targeted subsidies and innovative financing models.

PM EDRIVE Scheme

PM Electric Drive Revolution in Innovative Vehicle Upgrade (PM EDRIVE Scheme) is India’s latest push toward the promotion of electric mobility as the replacement to the earlier FAME II policy. It has fiscal as well as infrastructural interventions geared toward a hastened take-up of EVs specifically in two/three-wheeler as well as in bus segments but remarkably, this one does not extend direct subsidy benefits to electric cars.

• Launch Date
  • October 1, 2024
• Validty
  • 31 March 2026
• Ministry
  • The Ministry of Heavy Industries (MHI)
• Objective
  • To boost electric mobility and transition India toward a greener and more sustainable transport system.
• Financial Outlay
  • 10900 crore over two years
• Scope
  • Demand incentives for
    • Electric twowheelers 25 lakh units
    • Electric three wheelers 3 lakh units
    • Electric buses 14000 units
    • Automakers can claim reimbursements for EV sales similar to the FAME II scheme.

• Charging Infrastructure
  • Establishment of public charging stations in selected cities and along highways.
  • Modernization of test agencies to handle new green mobility technologies.

• Exclusion of Electric Cars
  • No direct subsidies for electric cars due to which the government feels that the proposed lower GST rates 5 and other measures suffice support the segment.

Comparison with the FAME Scheme

• The PM EDRIVE supersedes the FAME Faster Adoption and Manufacturing of Hybrid and Electric Vehicles Scheme which was sanctioned to reduce emissions and boost EVs in all segments.
• The Main Stages of FAME
  • FAME I 2015 to 2019
    • Focused on incentives for purchasing EVs and developing initial charging infrastructure.
  • FAME II 2019 to 2024
    • Broader scope emphasizing public transport EVs like ebuses twowheelers and three wheelers.
  • Allocated 119 billion for subsidies and charging infrastructure development.

Impact of Exclusion of Electric Cars in PM EDRIVE

• Slowing Sales
  • Electric car registrations were down 9 for April – August 2024 from the months prior to FAME II.
  • Lack of subsidies make them unaffordable, hence limiting their adoption Lack of Charging Stations.
• Charging Station
  • There are only 25000 public charging stations in India catering to 46 lakh EVs creating a ratio of 184 EVs per charging station far worse than global averages.
  • There is not enough infrastructure for the mass adoption of e cars.
• New Focus
  • The focus on taking away subsidies for cars seems to shift toward more emphasis on public transport and smaller EVsas an aid in this aim to decrease vehicular emissions in already overcrowded urban regions.

Support Measures for Electric Mobility beyond Subsidies

• Production Linked Incentive PLI Schemes
  • Encourages local production of auto parts and ACC batteries which reduces the cost of production.
• State Level Exemptions
  • Most states exempt EVs from road tax and waive the registration fee.

Challenges and Way Forward

• Robust Charging Infrastructure
  • In order to fuel the increasing fleet of EVs there is a need for investment in public and private charging networks.
• Electric Car Policy
  • For smaller EVs and public transport long term strategies for electric cars are necessary in order to meet climate goals and consumer demand.
• Balanced Incentives
  • Adding fiscal support for electric cars would ensure that all segments of EVs grow holistically.