Govt Plans To Increase Budget For Electric Two-Wheeler Subsidies In FY27

Days after Prime Minister Narendra Modi appealed to citizens to use electric vehicles to reduce fuel consumption, the government is considering increasing the budget for its flagship scheme to subsidise electric two-wheelers.

The Ministry of Heavy Industries is planning to seek additional funds for the PM E-Drive scheme, according to a report by Mint newspaper.

PM E-Drive (Prime Minister Electric Drive Revolution in Innovative Vehicle Enhancement) is a Rs 10,900 crore scheme launched in 2024 to subsidise electric two-wheelers.

While the scheme was originally designed to last until March 2026, it was later extended to July. The scheme has a target of subsidising 2.47 million electric two-wheelers. So far, about 2.35 million vehicles have benefited from the scheme.

Under the scheme, a subsidy of Rs 5,000 per kilowatt-hour of battery capacity was provided during the first year of the scheme, which was halved to Rs 2,500 in the second year.

As the duration of the scheme is about to end, the ministry is planning to increase the budget for the current financial year. However, the increase in the amount is yet to be finalised.

In the Budget, the government had allocated Rs 1,500 crore to the scheme for FY27. Since the government wants to encourage faster adoption of electric vehicles amid the crude supply crunch, an extension of the scheme is expected to ease the transition.

The plan to raise the scheme’s budget is part of the government’s deliberations on extending schemes that can be continued, the report said.

During the first two weeks of May, sales of electric two-wheelers increased by 13.5 percent to 49,809 units, compared to 43,897 units during the same period in 2025.

Interestingly, there has been a decline of 5.5 percent in overall two-wheeler sales during the same period.

This shows that buyers are considering electric two-wheelers amid rising fuel prices.