Government Extends Subsidies for E-Rickshaws and E-Carts Until March 2028

Key Highlights

• Subsidies for e-rickshaws and e-carts extended until March 31 2028
• Incentives capped at Rs 25000 per vehicle and Rs 5000 per kWh initially
• Budget for e-rickshaw and e-cart subsidies reduced to Rs 50 crore
• Electric 2-wheeler subsidy eligibility extended to July 31 2026
• PM E-DRIVE program total payout capped at Rs 10900 crore

Revised PM E-DRIVE Guidelines

The PM E-DRIVE (PM Electric Drive Revolution in Innovative Vehicle Enhancement) subsidy scheme has updated its guidelines for electric 3-wheelers and 2-wheelers. Registered electric 3-wheelers, including e-rickshaws and e-carts, will receive incentives until March 31, 2028. Registered electric 2-wheelers will remain eligible for subsidies until July 31, 2026. Previously, these incentives were set to expire in March 2026.

The government has introduced price caps for subsidy eligibility. Electric 2-wheelers priced above Rs 1.5 lakh and electric 3-wheelers priced above Rs 2.5 lakh (ex-factory) will not qualify for the scheme. The incentive for e-rickshaws and e-carts is capped at Rs 25,000 per vehicle, set at Rs 5,000 per kWh. After the initial period, the subsidy will reduce to Rs 2,500 per kWh, with a maximum of Rs 12,500 per vehicle. The subsidy will not exceed 15% of the ex-factory price of the 3-wheeler, whichever is lower.

Budget and Adoption Targets

The PM E-DRIVE initiative is a fund-limited program with total payouts capped at Rs 10,900 crore. The central government has reduced the budget for e-rickshaws and e-carts to Rs 50 crore, reflecting a slower adoption rate in this market. The L5 category of electric three-wheelers closed on December 26, 2025, after reaching its target.

The notification notes that incentive amounts may change if vehicle prices fluctuate. The government has increased its electric 2-wheeler target from 14 lakh to 24.8 lakh units. The target for e-rickshaws and three-wheeled e-carts has also risen, from 36,400 units to over 39,034 units.

Background and Industry Impact

The Electric Mobility Promotion Scheme 2024 (EMPS-2024) operated from April to September 2024. It was replaced by PM E-DRIVE in September 2024, a two-year program with a total investment of Rs 10,900 crore. PM E-DRIVE builds on the earlier FAME program, aiming to boost electric vehicle use through subsidies, charging infrastructure, and domestic manufacturing.

The updated guidelines come as India's electric vehicle sector grows rapidly. The EV ecosystem in India is projected to reach USD 132 billion by 2030.