India’s electric 2-wheeler (E2W) manufacturers have urged the government to extend incentives under the PM E Drive scheme beyond March 2026, highlighting concerns over near term demand and the need for policy clarity to sustain sector investments.
Industry executives stated that subsidies continue to play a role in easing upfront cost pressures for price sensitive buyers.
Policy visibility beyond FY26 has been highlighted as important for maintaining confidence in manufacturing expansion, dealer network growth and localisation efforts.
According to electric vehicle manufacturers, withdrawal of incentives could lead to a near term moderation in demand as buyers compare electric 2 wheelers with internal combustion engine alternatives.
Subsidy removal may raise on road prices by ₹6,000 to ₹12,000 per vehicle, with limited scope for absorption due to battery costs and regulatory expenses.
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Manufacturers noted that the impact of subsidy withdrawal may vary across segments. Incentives tend to influence retail and impulse driven buyers, while fleet operators and institutional customers focus more on uptime, service reach and lifecycle economics. In such cases, demand is seen as evaluation led rather than volatile.
Industry representatives also flagged structural challenges such as the inverted GST structure, where finished electric vehicles attract 5% tax while raw materials are taxed at 18%, impacting working capital and production costs.
There were calls for supply side support for electric components and manufacturing ecosystems, especially to improve affordability in Tier 2, Tier 3 and rural markets.
The PM E Drive scheme was launched in September 2024 with an initial outlay of ₹1,772 crore to support 24,80,000 electric 2 wheelers. Incentives of up to ₹10,000 per electric scooter are available, covering over 10% of the price for models priced below ₹1,00,000.
The broader scheme has an outlay of ₹10,900 crore and extends to electric 3 wheelers, trucks, buses and charging infrastructure, with incentives for e2Ws scheduled until March 2026.
E2W manufacturers continue to seek clarity on the PM E Drive subsidy framework beyond March 2026, citing demand sensitivity, investment planning needs and structural cost challenges within the electric mobility ecosystem.
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Published on: Jan 29, 2026, 12:06 PM IST
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