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.
