India’s EV Transition Gains Momentum: ₹10,900 Cr  E-Drive Scheme to Boost Public Transport

The Indian government has significantly accelerated its efforts to promote electric vehicles (EVs), reflecting a growing commitment to sustainable transportation. The recently announced PM E-Drive scheme, with a total outlay of ₹10,900 crore, marks a strategic shift towards supporting public transport and commercial sectors.

The latest policy brings significant changes, showing the country’s commitment to reducing pollution and speeding up EV adoption.

Let’s explain how India is reshaping its approach to EVs, what the new policy focuses on, and what it means for the auto industry.

Key Points of the PM E-Drive Scheme:

• Focus on Public and Commercial Sectors: The scheme prioritizes electric vehicles in public transport and commercial applications.
• Total Budget: A significant allocation of ₹10,900 crore is dedicated to supporting these sectors.
• Targeted Approach: Unlike FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles), which offered broader subsidies, PM E-Drive specifically targets areas like buses, trucks, and hybrid ambulances.
• Electric Bus Deployment: The scheme aims to deploy 14,028 electric buses to enhance public transportation.
• Addressing Commercial EV Gaps: PM E-Drive supports the adoption of electric trucks and hybrid ambulances, filling gaps in commercial EV usage.
• Electrifying Public Transport: A key objective is to transition public transportation to electric vehicles.
• Charging Infrastructure: The scheme will focus on building necessary charging infrastructure to support electric buses and other vehicles.
• Strengthening Supply Chain: Efforts will be made to improve the supply chain for sustainable EV growth in India.

The PM E-Drive initiative will enhance charging infrastructure, with ₹2,000 crore allocated to install 22,100 fast chargers for four-wheelers, 48,400 for two- and three-wheelers, and 1,800 for buses. This substantial investment aims to support the growing demand for EVs across different vehicle segments.

How Supply-Side Incentives Boost India’s EV Transition

Key Points:

• Strengthening Domestic Manufacturing: The PLI (production-linked incentive) schemes for the auto sector, with an outlay of Rs.26,000 crore and advanced chemistry cells at Rs.18,000 crore, aim to foster the growth of a robust domestic Electric Vehicle manufacturing base.
• Reducing Import Dependence: By incentivizing domestic production, India can reduce its reliance on imported EV components, leading to greater self-sufficiency.
• Lowering Electric Vehicle Costs: A strong domestic manufacturing base can help drive down the cost of EVs, making them more accessible to consumers.
• Attracting Global Investment: These incentives create a favorable environment for global investors to enter India’s EV market, bringing in expertise and capital.
• Competitive Advantage: A robust domestic EV industry can position India as a competitive player in the global EV market, capturing opportunities for exports and technology leadership.

Year	E Bus Sales	E Bus Penetration
FY 2017	0	0
FY 2018	35	0.1
FY 2019	75	0.2
FY 2020	483	0.8
FY 2021	373	4.4
FY 2022	1195	8.8
FY 2023	1904	5.6
FY 2024	3693	6.8

From FAME to Holistic Action

The FAME  I and II schemes, introduced in 2015 and 2019 with budgets of ₹795 crores and ₹11,500 crores,  respectively, have been instrumental in driving the sale of over 1.6 million Electric Vehicles, mainly focusing on electric two-wheelers, three-wheelers, and buses. These initiatives also prioritized the development of EV charging stations, further propelling market growth. 

FAME II made electric vehicles more affordable by focusing on buses and two-wheelers. These vehicles now represent 7% and almost 6.5% of their respective markets, respectively, which has significantly boosted demand for Electric Vehicles.

 Now, the government’s focus has evolved to a more comprehensive approach. Instead of isolated subsidies, India is embracing a broader, long-term strategy that includes developing infrastructure, boosting local manufacturing, and encouraging international investments in the Electric Vehicles sector.

Under this new framework, India’s electric mobility roadmap includes a shift towards local manufacturing of critical components, such as lithium-ion batteries, and establishing a charging infrastructure. The policy is seen as vital to reducing dependence on imports, especially as the government pushes for lithium-sourcing deals with countries like Australia and Argentina​.

Import Duty Cuts and Tesla’s Entry

The Indian government also cuts import duty to attract global Electric Vehicle giants. Tesla, for instance, has been eyeing the Indian market for years, and the recent policy change could encourage the company to establish a presence in India. The policy allows automakers to import up to 8,000 electric vehicles (EVs) annually at a reduced import duty, provided they invest heavily in local manufacturing​(

Impact on Domestic Players

While the policy encourages international investments, it also safeguards the interests of local companies like Tata Motors and Mahindra & Mahindra, who have significant stakes in the Electric Vehicle market. These companies have been pushing for policies that protect their interests while maintaining India’s attractiveness to global players. 

Holistic Approach to Green Mobility

The policy’s focus is not limited to passenger vehicles. It also aims to promote the adoption of electric two-wheelers, three-wheelers, and public transportation vehicles. Over the next few years, the second phase of the FAME scheme supports one million electric two-wheelers, 500,000 electric three-wheelers, and 7,000 electric buses. This holistic approach addresses multiple segments of the transportation sector, ensuring a widespread shift to cleaner mobility​.

Challenges and Opportunities

Despite the encouraging policy framework, several challenges remain. The lack of a well-developed charging infrastructure and high upfront costs of EVs continue to deter many buyers. However, with the new incentives for infrastructure development and local manufacturing, the Indian Electric Vehicle market is expected to become more accessible in the coming years.

On the flip side, this policy presents significant opportunities. The entry of global players like Tesla and the growth of domestic champions like Tata Motors will drive innovation, creating a competitive EV ecosystem. Additionally, lithium battery production and charging infrastructure investments will spur growth in related industries, from renewable energy to smart cities​.

Conclusion: A Sustainable Future for India

India’s new EV policy marks a pivotal moment in its journey toward a greener future. The policy aims to create a robust ecosystem that encourages Electric Vehicle adoption at all levels by focusing on local manufacturing, infrastructure development, and strategic partnerships.

With global giants like Tesla entering the market and domestic players ramping up production, India’s transition to electric mobility is poised to accelerate in the coming years. The government’s holistic approach, combining incentives, infrastructure development, and local partnerships, is the spark the industry needs to thrive.

As India shifts gears, it is clear that the nation is committed to becoming a global leader in electric mobility, paving the way for a cleaner and more sustainable future​.

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