EV subsidy extension for 2Ws, 3Ws beyond FY26 likely; PMO reviews proposal

The Centre is considering extending subsidies for electric two-wheelers (e-2Ws) and three-wheelers (e-3Ws) under the PM E-DRIVE scheme beyond the March 31, 2026 deadline, sources told Business Today, adding that the matter was reviewed by the Prime Minister’s Office (PMO) earlier this week.

The proposal, initiated by the Ministry of Heavy Industries (MHI), has been taken up with the Finance Ministry following a review at the PMO on Monday, where the status of fund utilisation and adoption trends in key EV segments were discussed, according to people aware of the development.

The push for an extension is being considered due to unspent allocations. Official estimates show that of the Rs 1,772 crore earmarked for electric two-wheelers, around Rs 1,259.9 crore has been utilised so far, leaving a sizeable balance. Similarly, in the three-wheeler category, about Rs 737.35 crore has been spent out of the Rs 907 crore allocated. “The idea is to ensure optimal utilisation of the allocated funds without seeking any additional budgetary support,” a person familiar with the discussions said.

Sources indicated that the extension, if approved, is likely to remain restricted to mass adoption segments such as e-2Ws, e-rickshaws and e-carts, where subsidies continue to play a key role in sustaining demand. These segments account for the bulk of India’s EV volumes and remain highly price-sensitive.

PM E-DRIVE, notified in September 2024 with a total outlay of Rs 10,900 crore, was originally designed as a two-year scheme, with incentives for e-2Ws and e-3Ws ending in March 2026, while other components such as electric buses, trucks and charging infrastructure will continue till March 2028.

Nearly 1 million electric two-wheelers have been sold under the scheme so far against a target of 1.4 million, indicating a gap in adoption. Industry players have been pushing for continuity in subsidies, warning that a premature withdrawal could impact demand.