PM E-DRIVE Scheme: A new initiative by the government of India to increase the EV market size

The Ministry of Heavy Industries (MHI) has previously introduced a proposal to the Union Cabinet regarding the implementation of a new scheme supporting the increased adoption rate of electric vehicles in India. In relation to this proposal, on September 11, the Union Cabinet agreed to make an investment in the new scheme called PM E-DRIVE (PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE), which will be the replacement of the earlier flagship programme Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME I & II). The FAME programme came into effect in April 2015 while enacted for nine years till March 2024.

A total of Rs. 10900 crore has been allotted by the government of India which will be invested in two years in the PM E-DRIVE scheme. It ensures the offering of incentives for EVs, including e-buses, e-two and three-wheelers, as well as hybrid ambulances and e-trucks. Nevertheless, both hybrid and electric cars do not include any subsidies in this scheme.

The objective of the PM E-DRIVE scheme

The  PM E-DRIVE scheme mainly aims to boost the prevalence of incorporating EVs among the people by means of not only providing subsidies for the purchase of EVs but also improving the charging infrastructure for the wider acceptance of EVs. This ultimately aims to achieve sustainable development goals in terms of minimizing the environmental impact of transportation and improving air quality. The scheme also emphasizes making an Aatmanirbhar Bharat by facilitating local manufacturing and strengthening the domestic supply chain of EVs. This initiative of the Government of India aims to address the growing concerns relating to environmental pollution and fuel security while making substantial developments in facilitating sustainable transportation solutions.

Key components of the PM E-DRIVE scheme

The Union Cabinet, chaired by Hon'ble PM Shri @narendramodi, has approved the 'PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme' to promote electric mobility in the country, with an outlay of ₹10,900 crore over two years.#PMeDrive pic.twitter.com/crwQdpcCrI

— Ministry of Heavy Industries (@MHI_GoI) September 11, 2024

Under the PM E-DRIVE scheme, Rs. 3679 crore subsidies or demand incentives have been allocated for incentivizing the adoption of e-two-wheelers, e-three-wheelers, e-trucks, e-ambulances, along other emerging electric vehicles. 3.16 lakh e-three wheelers, 24.79 lakh e-two wheelers, and 14028 e-buses will be supported by this scheme. 

The buying process has become easier than ever due to the inclusion of e-vouchers under this scheme. In order to make the accessibility of the demand incentives easier, MHI is leveraging e-vouchers for the buyers of EVs. The scheme portal will facilitate the generation of an Aadhaar authenticated e-Voucher for the customers during the time of EV purchase. Then, the buyers will be able to download the unique e-voucher, which they will get on their registered mobile number through a link.

In order to avail of the demand incentives offered by the PM E-DRIVE scheme, the EV buyers need to sign the e-voucher and then submit it to their respective dealers. Thereafter, the dealer needs to sign and upload the e-voucher on the PM E-DRIVE portal. Both the buyer and dealer will receive the signed e-voucher through an SMS. In order to claim the reimbursement of the demand incentives under this scheme, the signed e-voucher will be most vital for OEM (Original equipment manufacturer).

For the deployment of e-ambulances, the total allocation under the PM E-DRIVE scheme is Rs.500 crore. The Government of India has incorporated this new initiative for the promotion of the utilization of e-ambulance to facilitate a means of comfortable patient transport. The performances and safety protocols of e-ambulances will be designed in discussion with MoRTH, MoHFW and other vital stakeholders.

STUs (State transport units)/public transport agencies have been provided a sum of Rs. 4391 crore for procuring 14028 e-buses. The Convenience Energy Services Limited (CESL) will perform the demand aggregation in nine major cities having over 40 lakh populations. These cities are Chennai, Mumbai, Delhi, Kolkata, Ahmedabad, Bangalore, Pune, Hyderabad and Surat. Support will be provided to the Intercity and Interstate e-buses in discussion with states.

The trucks are regarded as a key contributor towards air pollution in India. In this regard, in order to encourage the deployment of e-trucks in the nation, Rs. 500 crore has been allotted. The eligibility criteria for obtaining incentives in the aspect of e-trucks is the availability of a scrapping certificate from registered vehicle scrapping centers approved by MoRTH.

Under the PM E-DRIVE scheme, ₹2,000 crore has been allocated for installing 22,100 fast chargers for e-4Ws, 1,800 chargers for e-buses, and 48,400 chargers for e-2Ws/3Ws. This initiative will enhance charging infrastructure across the country.#ElectricVehicles #PMeDrive pic.twitter.com/Jd6FzREl6V

— Ministry of Heavy Industries (@MHI_GoI) September 12, 2024

The respective scheme also seeks to address the concerns of EV buyers regarding travelling a long distance by announcing the installation of electric vehicle public charging stations (EVPCS). The scheme has made the announcement of installing 48,400 fast chargers for e- two-wheelers and e-three-wheelers, 22,100 fast chargers for e-four-wheelers, and 1800 fast chargers for e-buses. However, selected highways and selected cities with high penetration of EVs will be chosen for developing the charging infrastructure, for which Rs. 2000 crore will be outlaid.

In relation to the growing EV ecosystem in India, there is also the requirement for the modernization of the test agencies of MHI in order to support the new and emerging technologies with respect to enhancing green mobility. Rs. 780 crore has been approved for upgrading the testing agencies of MHI.

The Union Cabinet, chaired by Hon'ble Prime Minister Shri @narendramodi avaru, has approved the “PM-eBus Sewa-Payment Security Mechanism (PSM) scheme” with an outlay of ₹3,435.33 crore. This scheme will support the procurement and operation of over 38,000 electric buses… pic.twitter.com/nXsed2r8IE

— ಹೆಚ್.ಡಿ.ಕುಮಾರಸ್ವಾಮಿ | H.D.Kumaraswamy (@hd_kumaraswamy) September 11, 2024

The PM-eBus Sewa-Payment Security Mechanism (PSM) scheme has also got approval from the cabinet. This scheme will facilitate the procuring and operating of e-buses by Public Transport Authorities (PTAs) with an expenditure of Rs.3435.33 crore. While the deployment of more than 38,000 electric buses will be supported by the PSM scheme for the financial year 2024-25 to the financial year 2028-29, the operation of the e-buses will be supported for up to 12 years after their deployment dates.

Penetration rate of electric vehicles in India

The electric vehicle (EV) sector of India is witnessing rapid growth, accelerated by government incentives, technological advancements and rising environmental concerns. Electric vehicles in India had a penetration rate of 6.4 per cent in 2023 in comparison to 4.75 per cent in 2022. However, in comparison to the penetration rate of EVs a decade ago, substantial growth has been observed in the present time.

More than 1.5 million electric vehicles were sold in India in 2023, among which the majority proportion were electric two-wheelers. As per the forecasting the EV market of India is expected to expand to 113.99 billion US dollars by 2029 from 3.21 billion US dollars in 2022, with a CAGR (Compound annual growth rate) of 66.52 per cent.

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