Summary of subsidy scheme for EVs in India

Qasim Saif I

The penetration of EVs in Indian vehicle market have gone up from 0.01% to 1.66% from FY 15 to September, 2021[1]. This shows a clear increase in penetration of the EVs in the Indian vehicle market. Though the growth of EVs faces a several resistances in form of high upfront costs, the paucity of public charging infrastructure, and travel range.  The policy support from the government can be of a major motivator for promotion of EVs in India.

Government policies have a significant role to play in India’s nascent EV industry, as they can lay down the ground work for future procurement of EVs, financial incentives to end consumers and OEMs, and funding for manufacturing and charging infrastructure development. The EV ecosystem in India has been shaped by policies at both the central and state level. The policy support can also provide a crucial support to the EV segment, as mentioned above, upfront cost to customer is a major factor limiting the growth of EV segment. Policy support can help bring down a portion of this cost, hence helping the industry. Several states have announced their EV policy providing for incentives to the EV industry as well the customer.

The Government of India and several state governments have provided several benefits to the EV segment. The article aims at providing a single point reference to various schemes.

Central Government

At the central level, under the National Electric Mobility Mission Plan, FAME (Faster Adoption and Manufacture of Hybrid and Electric Vehicles) was launched in 2015. In the first phase of the FAME scheme, demand incentives in the form of a reduced upfront purchase price for all EV segments were disbursed to create a market for them. This phase continued till 31 March 2019, supporting the sales of approximately 2.78 lakh EVs, with a total incentive disbursement of INR 343 crore.

Building on the success of the first phase of FAME, the second phase was launched for four years, April 2019–March 2022, with a budget outlay of INR 10,000 crore. The incentives under the scheme are designed to focus on the following areas: demand creation, development of charging infrastructure, research and development of EV technologies, and push towards greater indigenisation. For the creation of market demand, the scheme provides incentives on the purchase of two-wheelers, three-wheelers, four-wheelers, and buses to be used for commercial purposes.

The incentives to customer are provided based on the size of the battery in the vehicle, the incentives available in the scheme are as follows:

Vehicle CategoryPermitted useIncentive to consumer
2-wheelerPersonal and Commercial UseLower of 15,000/ Kwh and 40% of Asset Cost
3-wheelerCommercial UseLower of 10,000/ Kwh and 20% of Asset Cost
4-wheelerCommercial UseLower of 10,000/ Kwh and 20% of Asset Cost
BusesCommercial UseLower of 20,000/ KWh and 40% of Asset Cost

Figure 3: Incentive available to end customer under FAME-II

Source: VKCPL research

State Governments

At the state level, the focus of EV policies is similar to that of the FAME scheme. Currently, in India, 19 states have notified their EV policy. These policies offer a broad range of incentives, starting from capital and purchase subsidies and tax and fees exemptions to mandatory procurements of EVs by state agencies and reserved parking spaces.

The table below summaries the subsidy benefits under various state government policies on EVs

StateCapital SubsidyConsumer Benefits
ManufacturingCharging InfrastructureSubsidySGST ReimbursementRoad tax ExemptionMotor vehicle tax exemptionRegistration fee exemption
Andhra PradeshYesYesNo100% (EV fleets)100%No100%

INR 10,000/ kWh


INR 10,000/ kWh


INR 10,000/ kWh


15% – first 24,000 –

upto INR 5,000


15% – first 70,000 –

upto INR 12,000



(a) 4W BEV- first 4,000 – upto INR 1 lakh

(b) 4W hybrid -first 1000 – upto INR 1 lakh


15% – first 1000 – upto INR 20 lakh


Top up (BPL/SC/ST) subsidy : INR 8,000 ; Special incentive (Li-ion) of INR 10,000




Demand generation incentive: INR 30,000/ vehicle; Purchase incentive: INR 5,000/kWh – upto INR 30,0000


Purchase incentive: INR 30,000/ vehicle; Interest subvention: 5% on loans


INR 10,000/kWh -first 10,000 – upto INR 1.5 lakh


Goods carrier: INR 30,000


INR 10,000/ kWh – upto INR 30,000/ vehicle


INR 10,000/ kWh – upto INR 30,000/ vehicle


INR 10,000/ kWh – upto INR 1,50,000/ vehicle







User subsidy: 30% ; Coupon: INR 25,000


User subsidy: 30% ; Coupon: (a) Car < INR 10 lakhs – INR 75,000 (b) Car > INR 10 lakh – INR 1 lakh




Interest free loans (Government employees): 100%


No100% (Government Transport Vehicle)NoNo

Incentive: INR 30,000 or 25% of EV

Madhya PradeshNoYesNoNoNo2W:

1% – first 15,000/5 years

Shared rickshaw: 1% – first 5,000/ 5 years

Electric auto rickshaw:

1% – first 5,000/5 years (d) Electric goods carrier- 1% – first 2,000/ 5 years

Car – 1% – first 6,000/ 5 years

Bus – 1% – first 1,500/ 5 years

100% :

(a) 2W – first 22,500

(b) 3W – first 7,500

(c) Rickshaw (shared and electric) – first 7,500

(d)Goods – first 3,000

(e) Car – first 9,000

(f) Buses – first 2,250


INR 5,000/ kWh – first 1 lakh – upto INR 10,000


INR 5,000/ kWh – first 15,000 – upto INR 30,000


INR 5,000/ kWh – first 10,000 – upto INR 1.5L



INR 10,000/ kWh – first 3,500 – upto INR 1.5 lakh


INR 4,000/kWh – first 200 – upto INR 5 lakh


(a) 4W: INR 4,000/ kWh – 2,500 – upto 15 lakh

(b) Strong Hybrid 4W: INR 4,000/ kWh – first 30 – upto INR 15 lakh


INR 4,000/ kWh – first 30 – upto INR 2 crore




15% – upto INR 5,000


15% – upto 12,000


15% – upto 1 lakh


10% – upto 20 lakh


Fleet owners – INR 30,000/ vehicle – first 5,000 EV goods carrier

PunjabNoYesNoNoNo100% (50% for hybrid)100% (e-rickshaws)
Tamil NaduYesNoNoNo100%No100%
TelanganaYesNoNoNoRoad tax: 100% exemption (a) 2W – 2 lakh (b) 3W – 20,000 (c) Commercial 4W – 5,000 (d) Light goods carriers – 10,000 (e) Pvt. cars – 5,000 (f) Buses – 5,000 (g) Tractors – allNo100%
Uttar PradeshNoYesNoNo(a) 2W – 100% (b) Others: 75%No100%
UttarakhandNoNoNoNoNo100% – 5 yearsNo
West BengalNoNoNoNoNoNoNo

[1] Refer graph below

Our article on financing electric mobility through BaaS structures can be read here

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