With India moving towards its ambitious goal of 35% EV penetration by 2030, the government has been urged by a parliamentary committee to restore subsidy on electric four-wheelers (e4Ws) and raise fiscal incentives on other electric vehicle (EV) segments. The call comes after the government recently cut purchase incentives for electric two-wheelers (e2Ws) and three-wheelers (e3Ws) under the PM eDRIVE scheme.
Government Cuts EV Subsidies Despite Industry Plea
EV OEMs have continuously insisted on longer government incentives to drive EV penetration. Rather than continuing or increasing subsidies, the government reduced financial support significantly. In the new scheme FY25, the e2W subsidy is reduced to Rs 2,500 per kWh, up to Rs 5,000 per vehicle. In the same vein, e3W subsidies have been reduced to Rs 2,500 per kWh, capped at Rs 25,000 per vehicle. Shockingly, e4Ws have been left out of subsidy coverage altogether.
Panel Calls for Inclusion of e4Ws and Increased Financial Support
The Standing Committee on Industry, in considering the approval of demand for 2025-26 for the Ministry of Heavy Industries (MHI), has suggested restoring the subsidies for e4Ws very strongly. The committee highlighted the point that passenger vehicles form a gigantic share of the vehicle base, particularly in urban areas, and that extending the subsidies would make it easier to incorporate EVs.
Apart from this, the committee has held the government responsible for the delay in the payment of subsidy claims under PM eDRIVE. Less than half of the total subsidy claims had been paid until last November. The panel further stated that despite subsidies, e-rickshaw and e-cart penetration remains very low, which calls for targeted awareness generation and better access to finance to drive adoption.
EV Penetration Still Low, e3Ws Take the Lead
Despite efforts to drive electrification, EV penetration in India is very low. As of February, overall EV penetration was a mere 7.32%, while e4W penetration was a mere 2%. The only exception has been e3Ws, where the adoption has risen more than 57%, so that one out of every two three-wheelers sold is electric. Compared to this, e2W adoption has not even crossed the 6% mark.
Apart from subsidy concerns, the committee also mocked the “meager” Rs 180 crore spent on public charging points for 2024-25 and that no money was spent. It is requesting the government to introduce charging networks throughout the country to fund the growing EV industry.
The committee also proposed connecting the subsidy with scrapping of old diesel vehicles, requesting them to be replaced by EVs to encourage cleaner mobility.
The Road Ahead
As EV development in India is lagging behind the schedule for the 2030 deadline, the committee suggestions are all policy push lines.By the re-introduction of e4W subsidies, acceleration of disbursals of subsidies, and building of charging infrastructure, the government is able to ensure seamless electric mobility transition and help the country meet its long-term agenda of sustainability.
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