News
15/01/26
India revises EV incentives to focus on performance
India revises EV incentives to focus on performance
Mumbai, 15 January (Argus) — India has revised its policy for the electric
vehicle sector as it enters a more mature phase of EV transition and focuses on
efficiency and cost control. From 13 January only those EVs that meet
performance and efficiency requirements will qualify for incentives. The change
marks a shift from volume-driven subsidies toward performance-based incentives.
The requirements include a minimum 80km driving range, a top speed of 40 km/h,
regenerative braking systems and standardised energy-consumption testing. Under
this change, the production-linked incentive (PLI) auto scheme has been aligned
with the Prime Minister Electric Drive Revolution in Innovative Vehicle
Enhancement (PM e-drive) scheme. The PM e-drive scheme offers immediate
discounts on two- and three-wheel vehicles and provides financial incentives for
establishing EV charging stations. The government has allocated 20bn rupees
($237.7mn) to support companies installing fast charging stations for two- and
three-wheelers. The PM e-drive scheme runs until March 2028, but subsidies for
electric two- and three-wheelers will stop in March 2026. Support for electric
buses, trucks, ambulances, along with charging stations and testing centres,
will continue through the scheme because encouraging widespread adoption is
still difficult and requires significant investment. Strong EV sales in in 2025
supported this shift in policy, with over 2.3mn units sold during the year from
around 2.02mn in 2024. Around 8pc of the total number of new vehicles including
two-, three- and four-wheelers were registered in 2025, government data show.
Sales of electric two- and three-wheelers and buses are rising quickly in major
cities, showing rapid growth in public transport electrification. This adoption
level has strengthened the government's confidence that the sector can sustain
growth even with more demanding quality and efficiency requirements for EV
manufacturing. On the manufacturing side, the PLI scheme facilitated the
production of 1.39mn EVs, comprising 1.04mn electric two-wheelers, 238,385
electric three-wheelers, 79,540 electric four-wheelers, and 1,391 electric buses
as of end 2025. The scheme was approved in September 2021 and will run until
March 2028 with a budget of Rs259.38bn. Although some car part manufacturers may
face higher expenses due to upgrades required by the new standards, the majority
of vehicle producers are expected to gain advantage from the policy change. The
industry is also gradually aligning with the government's localisation
objectives, progress in domestic value-addition certification shows. The
tightening of EV norms reflects growing confidence in India's electric mobility
ecosystem and a clear policy intent to prioritise quality, efficiency and
self-reliance. The changes are expected to support a more sustainable and
resilient EV market aligned with India's long-term goals of achieving 50pc EV
penetration by 2030 and net-zero emissions by 2070. By Deepika Singh Send
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