PM E-DRIVE

PM E-DRIVE

PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme: The PM E-DRIVE Scheme is a significant initiative by the Indian government to promote electric mobility across the country, replacing the previous FAME-II scheme. It is designed to encourage the adoption of electric vehicles (EVs) through financial outlays and demand incentives over a period of two years.

Key Features of the PM E-DRIVE Scheme:

1. Financial Outlay:
   • The scheme has a Rs 10,900 crore budget for implementation over two years.
   • It is aimed at incentivizing the adoption of electric vehicles in India, specifically targeting electric two-wheelers, three-wheelers, and buses, rather than electric cars.
2. Scope and Coverage:
   • The scheme will offer fiscal incentives for the purchase of approximately:
     • 25 lakh electric two-wheelers.
     • 3 lakh electric three-wheelers.
     • 14,000 electric buses.
   • Automakers will be able to claim reimbursements for eligible EV sales, similar to the FAME II scheme.
3. Exclusion of Electric Cars:
   • Electric cars are excluded from direct subsidies under the PM E-DRIVE scheme. The government believes that other measures, such as the reduced GST rate for electric cars, are sufficient to support the sector.
4. Other Provisions:
   • The scheme includes provisions for setting up public charging stations for electric vehicles (EVPCS) in selected cities and highways.
   • The test agencies will also be modernized to handle emerging green mobility technologies.

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What Was the FAME Scheme?
The FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme was introduced in 2015 under the National Electric Mobility Mission Plan (NEMMP) to promote electric and hybrid vehicles, reduce emissions, and foster sustainable transportation in India.

Phases of FAME Scheme:

1. FAME I (2015-2019):
   • Focused on providing incentives for the purchase of electric and hybrid vehicles.
   • Supported the development of charging infrastructure and aimed to promote cleaner mobility in both public and private sectors.
2. FAME II (2019-2024):
   • Expanded the scope of FAME I with a funding allocation of USD 1.19 billion.
   • Prioritized the adoption of electric buses, two-wheelers, and three-wheelers and further expanded charging infrastructure.
   • Targeted reducing emissions from commercial fleets and promoting cleaner public transport.

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Impact of Exclusion of Electric Cars in PM E-DRIVE:

1. Decline in Electric Car Sales:
   • Following the end of FAME-II, the absence of direct fiscal incentives for electric cars has led to a noticeable decline in sales.
   • From April to August 2024, the registrations of electric cars dropped by 9%, compared to the period when FAME-II was active.
2. Inadequate Charging Infrastructure:
   • India has around 25,000 public charging stations for approximately 46 lakh registered EVs.
   • The ratio of 184 EVs per charging station is much higher than in countries actively promoting e-mobility, pointing to a critical need for improved charging infrastructure.

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Supporting Measures Beyond Subsidies:
To support the EV sector in India, the government has introduced several measures to address the challenges of production costs, charging infrastructure, and market adoption:

1. Production Linked Incentive (PLI) Schemes:
   • The government has launched PLI schemes for both auto components and advanced cell chemistry (ACC) batteries, aimed at reducing production costs and encouraging domestic manufacturing.
   • These schemes are intended to foster economies of scale and improve the competitiveness of Indian EV manufacturers.
2. Lower GST for Electric Cars:
   • Electric cars continue to benefit from a lower Goods and Services Tax (GST) rate of 5%, compared to 28% for hybrid and CNG vehicles, and 49% for internal combustion engine vehicles.
   • This fiscal measure makes electric cars more affordable, indirectly supporting their growth in the market.

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Key Takeaways
The PM E-DRIVE Scheme aims to foster the growth of electric mobility in India by offering financial incentives for two-wheelers, three-wheelers, and buses, while excluding electric cars from direct subsidies. The focus on these vehicle segments aligns with the government’s efforts to promote cleaner mobility and reduce emissions, while also building essential charging infrastructure and modernizing testing facilities. Although the exclusion of electric cars from subsidies has impacted their sales, the government continues to support the sector through lower GST, PLI schemes, and strategic investments in charging infrastructure.

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