Govt cuts PM E-Drive e-rickshaw outlay by three-fourths

The ministry of heavy industries has slashed the outlay for e-rickshaws under the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme to ₹50 crore from ₹192 crore.

In a recent amendment notified on 13 August, the government placed its bets on providing demand incentives to electric three-wheelers used for passenger or cargo transport, i.e., the L5 category.

The amendment also increased the outlay for the L5 category vehicles from ₹715 crore to ₹857 crore, following low uptake of the incentives for e-rickshaws.

Low uptake was seen particularly in the e-rickshaw category, as the vehicles rely on imported components and struggle to meet the scheme’s localization criteria.

A little over 4,000 e-rickshaws had been sold under the ₹10,900-crore scheme to decarbonize last-mile mobility, data from its dashboard showed on 22 August.

The ministry also revised its targets for e-rickshaws and L5 category three-wheelers in the recent notification.

The government said it would cut its target from incentivising over 110,000 e-rickshaws to only about 40,000 units. At the same time, it raised the target of incentivizing L5 category three-wheelers from about 200,000 units to approximately 288,000 units.

Industry experts said the mathematics of generating margins fails when localization kicks in. “An Indian-made motor used in e-rickshaws costs nearly ₹15,000, while cheaper alternatives are available via imports. A benefit of ₹10,000-12,000 for each rickshaw then simply becomes unfeasible. While the scheme gives importance to e-rickshaws and last-mile mobility, only some larger companies benefit from it,” said Pawan Kakkar, managing director, Yatri E-Rickshaw.

E-rickshaws are critical in decarbonizing last-mile connectivity. Take Delhi, for instance, where thousands of e-rickshaws take passengers to and from metro stations.

“E-rickshaws offer a clean and cost-effective solution for last-mile connectivity while also stimulating job creation and entrepreneurial endeavours,” said a study by CUTS Centre for Competition, Investment, and Economic Regulation in August 2024.

It also noted that ambiguity in regulations hinders the entry of new market participants in the domain. “Ambiguities within regulations about licensing, permits, and operational guidelines pose formidable barriers to entry for operators. The inconsistent enforcement of these regulations exacerbates the problem, resulting in legal uncertainties and operational disruptions.”

This comes days after the Union government extended the PM E-Drive Scheme by two years, until 2027-28, for electric buses, trucks, and setting up charging infrastructure—segments that account for more than half of the scheme’s outlay but have seen no disbursal.

The allocation for e-buses was ₹4,391 crore, for e-trucks ₹500 crore, and for setting up charging infrastructure ₹2,000 crore.

The scheme received the Union cabinet’s nod in September 2024. Before this, the Centre ran two iterations of the Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles scheme from 2014-15 to 2023-24.

After the second FAME scheme lapsed in March 2024, the government notified an interim Electric Mobility Promotion Scheme (EMPS) until September 2024. The EMPS was subsumed within the PM E-Drive Scheme.