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PM E-DRIVE scheme and challenges

18 Aug 2025 GS 3 Govt schemes & initiatives
PM E-DRIVE scheme and challenges Click to view full image

Context: The Society of Indian Automobile Manufacturers (Siam) has urged the Ministry of Heavy Industries (MHI) to bring N1 category commercial vehicles (CVs) — those that weigh less than 3.5 tonnes — under the PM E-Drive scheme for electric trucks.

  • PM E-Drive scheme (launched after FAME-II ended in March 2024):

    • Outlay: ₹500 crore (till March 2026).

    • Current coverage by weight : N2 (3.5–12  tonnes) and N3 (>12  tonnes) e-trucks.

    • Excludes N1 (<3.5 t) Commercial Vehicles (CV), which are vital for last-mile logistics.

  •  Society of Indian Automobile Manufacturers (Siam) demand (April 2025 letter to MHI):

    • Urged inclusion of N1 Commercial Vehicles CVs (<3.5 tonnes) under PM E-DRIVE.

    • Argued these vehicles form 60% of Commercial Vehicles (CV) industry volumes and are crucial for urban deliveries.

SIAM’s Justifications for N1 Inclusion

  1. Emission reduction: High daily use (60–200 km) → greater per-vehicle environmental benefits.

  2. Energy security: Reduced reliance on imported fossil fuels.

  3. Cost efficiency: Lower fuel + maintenance costs → helps operators’ margins.

  4. Support for small players: Farmers, SMEs, and last-mile operators at “bottom of the pyramid” benefit most.

Historical Background

  • N1 EVs earlier supported under:

    • NITI Aayog’s Shoonya Campaign (zero-emission mobility for cities).

    • FAME-II scheme (covered N1 under e-4W umbrella, with subsidies).

  • With FAME-II’s expiry → policy gap created for N1 CVs.

Challenges in Current PM E-DRIVE Scheme

  1. Exclusion of N1 vehicles → undermines last-mile electrification.

  2. Scrappage certificate requirement: Almost none available (only 2 for N2, 0 for N3 by July 2025).

  3. Price cap of ₹1.25 crore → excludes long-range trucks and tippers.

  4. Low incentives:

    • ₹2.7–3.6 lakh (N2), ₹7.8–9.3 lakh (N3).

    • Far lower than subsidies for e-buses (up to ₹35 lakh).

  5. Localisation mandate: Traction motors → constrained by rare earth supply.

  6. Unclear approval timelines for certification → adds uncertainty.

Implications

If Included

  • Boost last-mile electrification, aligning with urban climate goals.

  • Lower logistics costs → benefits e-commerce, SMEs, agriculture.

  • Stronger ecosystem for charging infra in cities.

If Excluded

  • Risk of policy gap → slow adoption in the most high-volume, high-usage CV category.

  • Small businesses and farmers miss out on subsidies.

  • India may struggle to meet urban emission targets and EV penetration goals.


The exclusion of N1 CVs (<3.5 t) from PM E-Drive is seen as a critical design flaw, given their dominance in last-mile delivery and high usage. SIAM’s push highlights that electrifying this segment could deliver maximum environmental, economic, and social gains compared to larger trucks.



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