PM E-DRIVE likely to boost local EV manufacturing in a phased manner, to replace FAME: Report

Like its predecessor FAME, the PM E-DRIVE scheme is designed to support the production of locally manufactured EVs.

The recently launched Prime Minister’s E-DRIVE scheme will feature a phased manufacturing program (PMP) to boost local production of electric vehicle (EV) components, sources familiar with the matter told The Economic Times.

Under the scheme, EV manufacturers that source components locally will receive financial support without the need for a domestic value addition requirement. However, local assembly of parts to create EV components will be mandatory for subsidy eligibility, though suppliers will still be able to import parts, officials informed ET.

“There will be a PMP to promote local EV manufacturing. Companies seeking subsidies under the scheme will have six months to comply with the PMP from the scheme’s notification date,” said a senior government official, speaking on condition of anonymity told ET. These companies must ensure components are assembled within India, the official added.

The financial incentives for electric two-wheelers will be reduced to Rs 5,000 per vehicle starting in 2025-26, while subsidies for electric three-wheelers will be capped at Rs 25,000 per vehicle, according to the report.

Another official mentioned that component suppliers’ manufacturing facilities will be inspected to prevent misuse of the subsidy program, with biannual inspections planned to monitor compliance among EV manufacturers.

The Centre has approved the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme for two years, allocating Rs 10,900 crore, replacing the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme that had been in place since 2015.

Additionally, the official said that the PM E-DRIVE will absorb the Electric Mobility Promotion Scheme 2024, which was introduced to subsidise EVs ahead of the 2024 general election. Like its predecessor FAME, the PM E-DRIVE scheme is designed to support the production of locally manufactured EVs.