India PM E-DRIVE Scheme: Rs 10,900 cr EV demand-incentive and charging-infra programme replacing FAME-II

Mechanism

PM E-DRIVE is the third generation of India's central-government EV demand-incentive scheme, succeeding FAME-I (2015-2019) and FAME-II (2019-2024, Rs 11,500 cr deployed). After FAME-II expired on 31 March 2024 a four-month stop-gap, EMPS-2024, kept e-2W/e-3W demand alive at a reduced rate; PM E-DRIVE rolls EMPS-2024 into a larger two-year envelope.

Allocation breakdown of the Rs 10,900 cr outlay:

• Rs 3,679 cr — demand incentives for e-2W, e-3W, e-ambulance,

e-truck and other emerging EV categories (e-2W: Rs 5,000/kWh, capped at 10% of ex-factory price)

• Rs 4,391 cr — procurement of 14,028 e-buses by State Transport

Undertakings (via CESL aggregation tender)

• Rs 2,000 cr — EV public charging stations (88,500 stations target

across highways, metros, state capitals)

• Rs 500 cr — e-ambulance deployment
• Rs 500 cr — e-truck incentives
• Rs 780 cr — upgrading MHI testing agencies (ARAI, ICAT, etc.)

Eligibility is gated on advanced-chemistry-cell (ACC) battery sourcing, which routes demand back into India's PLI-ACC battery gigafactory programme.

Downstream implications

• Re-anchors India's EV demand curve after the FAME-II/EMPS gap;

expected to lift e-2W penetration from ~5% to ~10% of new sales by FY26 and accelerate e-bus fleet electrification (largest central e-bus order to date).

• Indian listed EV-exposed names (Tata Motors EV, Mahindra Last

Mile Mobility, Ola Electric, TVS, Ather Energy, Bajaj Auto, Ashok Leyland, JBM Auto) gain medium-term margin support; imported-cell incumbents lose share to ACC-domiciled supply as PLI-ACC capacity (ACC + Reliance + Ola Cell + others) ramps.

• Charging-infrastructure CAPEX of Rs 2,000 cr opens room for

Tata Power, Adani Green/EV, ChargeZone and EESL-CESL ecosystem build-out; July 2025 amendment biases EVPCS hardware toward domestic manufacturers.

• Complements upstream PLI-ACC battery-cell scheme and broader

PLI-Auto programme, forming a coordinated demand-pull / supply-push couple analogous to US IRA §30D + §45X stack.

Open questions

• Whether disbursement velocity matches FAME-II benchmarks given

the larger e-bus tranche relies on CESL aggregation lead times.

• Post-March 2026 successor: the Ministry has signalled a

PM E-DRIVE-2 phase but no draft outlay has been notified.

• Interaction with Production-Linked Incentive (PLI)-Auto and

PLI-ACC schemes — risk of overlap on supply-side OEM benefits.