The Union Cabinet has approved the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-Drive) Scheme, with a budget of ₹10,900 crore for two years, along with a Payment Security Mechanism (PSM) of ₹3,435.33 crore under the PM-eBus Sewa initiative to promote vehicle electrification.
A total of ₹3,679 crore will be allocated as subsidies for purchasing electric two-wheelers, three-wheelers, ambulances, trucks, and other emerging electric vehicles (EVs) under the PM E-Drive Scheme. According to a government statement, this initiative aims to support the procurement of 2.479 million electric two-wheelers, 316,000 electric three-wheelers, and 14,028 electric buses.
States and cities will be prioritized for public buses based on their adherence to old vehicle scrapping guidelines. As part of the effort to alleviate EV range anxiety, ₹2,000 crore will be allocated to install 22,100 fast chargers for electric four-wheelers, 1,800 for electric buses, and 48,400 for electric two-wheelers and three-wheelers.
Additionally, the scheme will provide ₹500 crore to encourage the adoption of electric trucks, and ₹780 crore for upgrading testing agencies to support the EV ecosystem.
Pawan Mulukutla, WRI India’s executive program director for integrated transport, clean air, and hydrogen, noted that the Cabinet’s decision underscores India’s ambitious decarbonization goals in the transport sector, with plans to deploy 50,000–60,000 electric buses through initiatives like the National Electric Bus Programme and the PM-eBus Sewa. He highlighted that the PSM will help make the project more bankable, encouraging more participation from private players who were previously hesitant due to concerns about delayed payments or defaults. This increased competition could ultimately reduce operational costs.
Under the PM-eBus Sewa Scheme, 10,000 air-conditioned electric buses will be provided to tier-2 and tier-3 cities through a public-private partnership model. The government informed Parliament that, as of August, ₹541 crore had been allocated for bus operations and related infrastructure in 75 cities.
Industry experts and policy analysts have called for the implementation of the PSM to ensure timely payments to electric bus suppliers and operators, as many state government transport undertakings are financially strained and often delay payments to contractors. A similar mechanism is already in place for solar power projects, managed by the Solar Energy Corporation of India Limited.
