Parliamentary Committee bats for subsidy on electric cars under PM E-DRIVE Scheme

The Department-Related Parliamentary Standing Committee on Industry (Rajya Sabha,) chaired by Tiruchi Siva, has recommended introduction of consumer subsidy for electric four-wheelers to reduce the upfront cost differential between electric vehicles (EVs) and internal combustion engine (ICE) vehicles.

“In the absence of a consumer-oriented subsidy, the transition in the four-wheeler segment — particularly among middle-class and private buyers — may remain slow and sub-optimal,” the committee said.

The Committee noted with concern that electric four-wheelers (e-4Ws) are not covered under the PM E-DRIVE scheme, despite the significantly higher upfront cost vis-à-vis conventional ICE vehicles acting as a deterrent for prospective buyers.

It also recommended the ministry of heavy industries (MHI) to urgently introduce a targeted and time-bound consumer incentive mechanism for electric four-wheelers under the PM E-DRIVE framework or through a dedicated sub-scheme.

“Structure incentives in a calibrated manner linked to battery capacity, vehicle efficiency, and price caps to ensure fiscal prudence while effectively bridging the cost differential between EVs and ICE vehicles,” it suggested.

It also urged the ministry to institute a periodic impact assessment to evaluate whether Auto production-linked incentive (PLI) scheme’s benefits are translating into tangible reductions in retail prices and improved consumer accessibility.

The Parliamentary Standing Committee noted that Rs 10,900 crore PM E-Drives scheme’s progress remains heavily concentrated in the electric two-wheeler and electric three-wheeler segments. “By contrast, electric trucks (e-trucks) and electric buses (e-buses) have recorded nil achievement, and the electric rickshaw/electric cart (e-rickshaw/e-cart) segment has reached only 3,602 units against a revised target of 39,034. Electric ambulances (e-ambulances) also remain at zero,” it said.

It also recommended extending demand incentives for e-2Ws up to 31 March 2028, the terminal year of PM E-DRIVE, with a calibrated tapering mechanism to avoid policy shocks in a segment that has shown strong adoption and supports large-scale livelihoods.

On the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), which was introduced to woo Elon Musk-led Tesla, but failed to find any takers, the committee suggested a comprehensive review of SPMEPCI in consultation with global and domestic stakeholders, with a view to recalibrating investment thresholds, value-addition timelines, or incentive structures, while ensuring that core objectives of domestic manufacturing and reduced import dependence remain protected.

On the Rs 18,100 crore PLI Scheme for Advanced Chemistry Cell (ACC) Battery Storage, the committee said that no incentives have been disbursed due to non-fulfilment of eligibility conditions.

The ACC PLI scheme aims to create 50 GWh of manufacturing capacity. However, only 40 GWh has been awarded so far, and just 1 GWh has been commissioned.

The committee expressed serious concern over the massive disconnect between the approved subsidy path and the actual meagre allocations and utilisations. It recommended conducting an immediate beneficiary-wise review with a status report within three months.

The Parliamentary panel expressed deep concern over India's dependence on rare earth and critical minerals, which are largely imported and dominated globally by a few countries, particularly the People’s Republic of China, which contributes a major share of mining output and processing capacity. Chinese export curbs on key rare earth magnets have led to supply chain bottlenecks. The committee reiterated that batteries constitute a large share of the cost of an electric vehicle — the single largest component — making domestic ACC manufacturing indispensable for lowering EV prices, strengthening energy security, and building export competitiveness.