Understanding India's EV Subsidy Landscape: State vs Central Schemes

From FAME to PM e-DRIVE: The Central Subsidy Evolution

The FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme was India's first structured central EV subsidy programme. FAME II (2019–2024) disbursed approximately ₹10,000 crore in incentives for over 1.5 million EVs and 7,400 charging stations. With FAME II concluded in March 2024, the PM e-DRIVE scheme, approved in September 2024 with a ₹10,900 crore outlay for FY2024-25 to FY2025-26, takes over with a recalibrated focus: two-wheelers, three-wheelers, and electric buses rather than personal four-wheelers.

PM e-DRIVE Scheme: Key Parameters

• check_circleTotal outlay: ₹10,900 crore across FY2024-25 and FY2025-26
• check_circleElectric two-wheelers: ₹5,000 per kWh of battery capacity, maximum ₹10,000 per vehicle
• check_circleElectric three-wheelers (e-rickshaws, e-autos, L5): ₹25,000 per vehicle
• check_circleElectric intracity buses (9–12 metre): ₹20 lakh per bus; (12+ metre): ₹35 lakh per bus
• check_circleEV charging infrastructure: ₹2,000 crore component for public charging rollout
• check_circleBenefit flows through registered OEMs, passed to buyer as price reduction at point of sale

State-Level Incentives: The Real Opportunity for Operators

For many buyers and fleet operators, state incentives can substantially exceed central subsidies, particularly for four-wheelers not covered under PM e-DRIVE. The key state schemes as of early 2026 include the following:

• check_circleDelhi EV Policy 2.0 (Draft, 2026): Up to ₹25,000 for e-two-wheelers, ₹1.5 lakh for e-four-wheelers, ₹30,000 for e-autos. Road tax and registration fee waiver.
• check_circleTamil Nadu: 100% SGST reimbursement on EVs at dealer level, ₹10,000 consumer incentive for e-two-wheelers. Special incentive rates for EV fleet operators making bulk purchases.
• check_circleGujarat: ₹20,000 for e-two-wheelers (income-linked), ₹1.5 lakh for e-buses. Full road tax exemption through FY2026.
• check_circleMaharashtra: Stamp duty exemption on EV financing agreements; dedicated subsidy structure for EV public transport operators.
• check_circleKarnataka: 100% road tax and registration fee exemption; 5-year exemption from permit fees for electric autos and cabs.
• check_circleRajasthan: ₹10,000 for e-two-wheelers, interest subvention on EV loans from state financial institutions.

PLI Scheme for ACC Battery Manufacturing

For operators investing in energy storage for large charging hubs or grid-connected battery systems, India's PLI scheme for ACC (Advanced Chemistry Cell) batteries is directly relevant. The ₹18,100 crore scheme incentivises domestic battery manufacturing, with the downstream effect of reducing battery procurement costs for operators by an estimated 15–20% over the scheme period as domestic supply scales and import dependency reduces.

How to Stack Incentives: A Step-by-Step Guide

• check_circleVerify the vehicle model is registered on the PM e-DRIVE OEM portal before committing to purchase
• check_circleApply for state subsidy at dealer level; most states process the benefit at point of sale
• check_circleClaim SGST reimbursement (where applicable) through the state portal within 90 days of purchase
• check_circleEnsure GST invoice correctly reflects the 5% EV rate for ITC eligibility (commercial buyers)
• check_circleCheck PLI-linked battery discount eligibility with the OEM, passed through as a vehicle price reduction
• check_circleRegister for road tax exemption at the RTO using the EV-specific application form for your state

India's EV incentive structure rewards the informed buyer and operator. Unassisted buyers typically capture only 40–60% of available benefits. For fleet operators making bulk EV purchases in the ₹1–5 crore range, professional navigation of the full subsidy stack (central, state, and financing schemes combined) can represent ₹50–80 lakh in realised savings that would otherwise be left unclaimed.