India’s electric vehicle (EV) landscape is undergoing a transformative shift, thanks to the implementation of several government initiatives designed to promote the adoption and manufacturing of EVs. These schemes are paving the way for a greener and more sustainable transportation future, fostering innovation, boosting domestic manufacturing, and addressing the growing need for clean energy solutions. Let’s explore the key government schemes driving this change.
The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) Scheme, Phase-II, was launched on April 1, 2019, with a budget allocation of ₹ 11,500 crore. This five-year initiative focuses on incentivizing the adoption of electric vehicles, including two-wheelers (e-2Ws), three-wheelers (e-3Ws), four-wheelers (e-4Ws), buses (e-buses), and EV public charging stations. By providing substantial financial support, the scheme encourages both consumers and manufacturers to embrace electric mobility, thereby reducing the carbon footprint of the transportation sector.
Approved in September 2021, the PLI-Auto scheme aims to enhance India’s capabilities in manufacturing advanced automotive technology (AAT) products. With a budgetary outlay of ₹25,938 crore, this initiative offers financial incentives to encourage domestic manufacturing. To qualify, manufacturers must achieve a minimum Domestic Value Addition (DVA) of 50%. By boosting local production and attracting investments in the automotive manufacturing value chain, the scheme strengthens India’s position as a global manufacturing hub for advanced vehicles, including electric ones.
The government’s PLI scheme for Advanced Chemistry Cells (ACC) was approved on May 12, 2021, with a budget allocation of ₹ 18,100 crore. The aim is to build a competitive domestic manufacturing ecosystem for ACC batteries, which are crucial for EVs. The scheme seeks to establish a capacity for 50 GWh of ACC batteries in India, fostering innovation and ensuring a steady supply of high-quality, cost-effective batteries for electric vehicles. This initiative is pivotal in ensuring that India meets the growing demand for EVs, while also reducing reliance on imports.
In a bid to further accelerate the transition to electric mobility, the Government of India introduced the PM E-DRIVE scheme, which was notified on September 29, 2024. With a total outlay of ₹ 10,900 crore, the scheme aims to support a wide range of electric vehicles, including two-wheelers, three-wheelers, electric trucks, buses, ambulances, and public charging stations. It also includes provisions for the upgradation of testing agencies. This two-year scheme is expected to boost the adoption of electric vehicles across different sectors and encourage the establishment of critical EV infrastructure.
Another important initiative to promote sustainable public transportation is the PM e-Bus Sewa-Payment Security Mechanism Scheme, notified on October 28, 2024. With an outlay of ₹3,435.33 crore, this scheme focuses on the deployment of more than 38,000 electric buses across the country. It provides payment security to e-bus operators in the event of payment defaults by Public Transport Authorities (PTAs). This scheme aims to ensure the seamless rollout of electric buses in India’s cities, which will play a significant role in reducing urban pollution and promoting sustainable public transport options.
To promote the domestic manufacturing of electric passenger cars, the Government of India notified the Scheme for Promotion of Manufacturing of Electric Passenger Cars in India (SPMEPCI) on March 15, 2024. This scheme encourages applicants to invest a minimum of ₹4,150 crore to establish manufacturing units for electric cars.
The scheme stipulates that the manufacturing units must achieve a minimum of 25% Domestic Value Addition (DVA) by the end of the third year and 50% DVA by the end of the fifth year. This initiative will not only boost the production of electric cars but also create job opportunities and foster innovation in the automotive sector.
India’s push towards electric mobility is being significantly bolstered by a series of strategic government initiatives aimed at both the adoption and manufacturing of electric vehicles. The schemes, including the FAME India Scheme Phase-II, PLI for the automotive sector, PLI for ACC batteries, and others, are providing critical support to manufacturers, consumers, and infrastructure developers.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Feb 14, 2025, 1:37 PM IST
Sachin Gupta
Sachin Gupta is a Content Writer with 6+ years of experience in the stock market, including global markets like the US, Canada, and Australia. At Angel One, Sachin specialises in creating financial content that simplifies complex market trends. Sachin holds a Master's in Commerce, specialising in Economics.
Know MoreWe're Live on WhatsApp! Join our channel for market insights & updates
Get the link to download the App
