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The Union Cabinet has approved the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-Drive) Scheme, allocating ₹10,900 crore over two years to accelerate vehicle electrification in India. A Payment Security Mechanism (PSM) of ₹3,435.33 crore has been introduced under the PM-eBus Sewa, providing further momentum to electric vehicle (EV) adoption.

The PM E-Drive Scheme replaces the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) Scheme. The FAME scheme was launched in April 2015 and ran for nine years in two different editions.

Under the PM E-Drive Scheme, ₹3,679 crore will be earmarked as subsidies for purchasing a range of electric vehicles, including e-two-wheelers, e-three-wheelers, e-ambulances, and e-trucks. The government aims to support the procurement of 2.479 million e-2Ws, 316,000 e-3Ws, and 14,028 e-buses under this scheme. The Ministry of Heavy Industries will oversee the scheme’s implementation, providing e-vouchers for buyers and manufacturers via a dedicated portal.

In an effort to expand public transport electrification, ₹4,391 crore has been set aside for public transport agencies to acquire 14,028 e-buses. The Convergence Energy Services Limited (CESL) will conduct demand aggregation in nine major cities with populations exceeding four million, including Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Surat, Bangalore, Pune, and Hyderabad. The scheme will also support intercity and interstate e-buses in coordination with state governments.

Here are some key aspects of the scheme

• ₹500 crore ($50 million USD) for the deployment of e-trucks.
• ₹500 crore ($50 million USD) for the deployment of e-ambulances.
• ₹4,391 crores ($529 million USD) for e-buses.
• ₹2,729 crore ($329 million USD) for e-2Ws, e-3Ws, and other emerging EVs.
• ₹2,000 crore ($241 million USD) for public charging stations.
• ₹780 crore ($94 million USD) for modernisation of testing agencies.

States and cities that comply with vehicle scrapping guidelines will receive priority, encouraging the replacement of older buses. To alleviate concerns about the EV range, ₹2,000 crore will be allocated for the installation of 22,100 fast chargers for e-four-wheelers, 1,800 for e-buses, and 48,400 for e-2Ws and e-3Ws. The scheme also includes ₹500 crore to incentivise the adoption of electric trucks and ₹780 crore for modernising testing agencies within the EV ecosystem.

Pawan Mulukutla, Executive Programme Director for Integrated Transport, Clean Air, and Hydrogen at WRI India, highlighted the Cabinet’s decision’s significance, reaffirming India’s ambitious decarbonisation goals in the transport sector. He emphasised the expected deployment of 50,000–60,000 e-buses in the coming years through the National Electric Bus Programme and PM-eBus Sewa, noting the importance of PSM in making the projects bankable and attracting private sector participation.

Under the PM-eBus Sewa Scheme, 10,000 air-conditioned electric buses will be introduced in tier-2 and tier-3 cities under a public-private partnership model. As of August, ₹541 crore was allocated in the vote-on-account for bus operations and infrastructure in 75 cities.

Also Read | Government unveils Rs 500 crore scheme to boost E-Mobility

Industry stakeholders have long advocated for a Payment Security Mechanism to ensure timely payments to electric bus suppliers and operators, as state-run transport undertakings often delay payments. The Solar Energy Corporation of India Limited has a similar mechanism in place for solar power generation projects, which has proven effective in boosting investor confidence.

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