Electric Vehicle Subsidies Update 2026: Government Outlines Revised FAME Phase-3 Guidelines
In India, there have been various revisions in the electric vehicle (EV) subsidies policy in 2026, as the Indian government is making changes to the incentive policy in relation to the PM E-DRIVE Scheme. While the debate on FAME Phase-3 program continues, the Centre has not yet announced the third phase of the FAME Scheme.
The PM E-DRIVE scheme stands as the major central government scheme for electric mobility and manufacturing in India.
PM E-DRIVE Replaces the Earlier FAME Framework
PM E-DRIVE was launched by the Ministry of Heavy Industries on 29th September 2024 with an initial financial commitment of ₹10,900 crore.
The new scheme is meant to take the place of FAME II scheme, which came to an end on 31st March 2024. Following changes in the amendment, PM E-DRIVE will be operational till 31st March 2028.
The scheme is applicable for electric two-wheelers, three-wheelers, buses, trucks, ambulances, and charging infrastructure.
Revised EV Subsidies and Incentives in 2026
The government has revised incentive structures for different vehicle categories.
Key provisions include:
- Two-Wheelers: Incentive worth ₹2,500/kWh, limited to ₹5,000 per vehicle, on condition of the scheme.
- Three-Wheelers: E-Rickshaws and E-Carts qualify for incentives of ₹2,500/kWh limited to ₹12,500 per vehicle.
- Buses: Scheme supports will continue via allocations for the operators of public transport and state transport undertakings.
- Trucks: Incentive shall be given depending on battery capacity and gross vehicle weight.
- Ambulances: Incentive under the scheme is worth ₹30,000/kWh limited to 35% of the ex-factory price of the vehicle.
Electric passenger cars are not covered under the current PM E-DRIVE demand-incentive framework.
Government Extends Support for Electric Two-Wheelers
On 10th August 2026, the Ministry of Heavy Industries has sent a notification upgrading the budget and timeline of the scheme for electric two-wheelers.
There were modifications made for electric three-wheelers and charging infrastructure in 2026.
This is done in order to ensure customer satisfaction as well as motivate the producers to manufacture at home.
Charging Infrastructure Gets ₹2,000 Crore Allocation
In addition to that, PM E-Drive initiative is also concerned about minimizing issues related to charging.
The government has announced ₹2,000 crore funding for public charging facilities of electric vehicles. As per Ministry of Heavy Industries, up to ₹689 crore approvals have been made for 6,562 chargers by July 2026.
What Should EV Buyers Know?
Potential consumers of electric cars are supposed to ensure that their chosen car meets the incentives set at the moment.
Incentives will be based on the category of the car, battery capacity, manufacturer’s eligibility, and deadlines. Consumers should also confirm that there are any incentives for the chosen car reflected in the buying price.
India’s EV Policy Moves Beyond FAME
The shift from FAME to PM E-DRIVE indicates the larger trend towards providing support for the entire system of electric mobility.
As opposed to launching a finalized Phase-3 plan of FAME, the Government has kept on amending PM E-DRIVE to help with the adoption, manufacture, and infrastructure for charging.
The success of the amendments will rely on the availability of affordable EVs, dependable charging networks, indigenous battery production, and subsidies implementation.
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