FAME II & EMPS Subsidies: What EV Buyers in India Need to Know

Introduction

If you are planning to buy an electric two-wheeler or three-wheeler in India, the subsidy landscape can feel like a moving target. FAME II ended. EMPS came and went. PM E-DRIVE is now the active central scheme. And somewhere in between, deadlines shifted, rates changed, and confusion multiplied. For fleet operators calculating total cost of ownership and for individual buyers comparing showroom prices, understanding exactly what subsidy applies today is not just useful—it is essential.

This guide cuts through the noise. You will learn what FAME II and EMPS actually delivered, how the current PM E-DRIVE scheme works for 2W and 3W buyers, what you need to do to claim your benefit, and how state-level incentives can stack on top of central subsidies to dramatically reduce your upfront cost.

The Journey from FAME II to PM E-DRIVE

FAME II (Faster Adoption and Manufacturing of Electric Vehicles Phase II) ran from April 2019 to March 2024 with a total outlay of ₹11,500 crore. It was the scheme that put electric two-wheelers on India's roads at scale. By the time it concluded, over 16.7 lakh electric vehicles had been supported, with electric two-wheelers accounting for the overwhelming majority—over 14.28 lakh units 8 12. The scheme also funded thousands of public charging stations and deployed thousands of electric buses.

But FAME II had its critics. The localisation requirements tightened over time, subsidy rates were revised downward, and the scheme's abrupt end in March 2024 created a demand shock. Electric two-wheeler sales dipped sharply before recovering as the industry adjusted to a lower-subsidy reality.

The government then introduced the Electric Mobility Promotion Scheme (EMPS) 2024 as a bridge. Notified in March 2024 and effective from April 1 to September 30, 2024, EMPS was designed to maintain momentum while a larger, more comprehensive scheme was prepared 3. It offered demand incentives for electric two and three-wheelers and funded charging infrastructure, but with a smaller outlay and a deliberately short duration.

What Was EMPS 2024 and Why It Mattered

EMPS 2024 was never meant to be permanent. It was a holding measure—a way to keep EV adoption from collapsing after FAME II expired while the government designed its successor. For buyers, EMPS provided an upfront discount at the dealership, though at reduced rates compared to FAME II's peak incentives.

The scheme was subsumed into PM E-DRIVE on October 1, 2024 2 3. If you bought an eligible EV between April and September 2024, your subsidy came through EMPS. If you bought on or after October 1, 2024, your subsidy flows through PM E-DRIVE. For practical purposes, the claim mechanism is identical: the discount is applied at the point of sale, and the dealer or manufacturer handles the back-end paperwork.

Current Subsidy Rates Under PM E-DRIVE

The PM E-DRIVE scheme, launched in September 2024 with a ₹10,900 crore outlay, is now the primary central incentive program for electric two and three-wheelers 2. The subsidy structure has evolved, with rates and deadlines adjusted based on uptake and budget allocation.

For electric two-wheelers, the incentive was originally set at ₹5,000 per kWh in FY 2024-25, halving to ₹2,500 per kWh from April 2025 10. In August 2026, the government extended the e-2W subsidy through March 2028, with the ₹2,500 per kWh rate capped at ₹5,000 per vehicle continuing 9. An additional ₹1,000 crore was provisioned for e-2W subsidies, taking the total PM E-DRIVE outlay to ₹11,900 crore.

Electric three-wheelers, particularly the L5 category, saw their subsidy cap reduce from ₹50,000 to ₹25,000 in FY 2025-26, with the ₹2,500 per kWh rate applying 10. Notably, government officials have indicated that electric three-wheelers no longer require incentives to sustain adoption, given the segment's high penetration—electric three-wheelers accounted for 65.3% of total three-wheeler retail in August 2026 6. This suggests the 3W subsidy may phase out sooner than the 2W incentive.

For electric two-wheeler buyers, the bottom line in 2026 is simple: you can expect up to ₹5,000 off the showroom price on an eligible model. On a typical ₹80,000-₹1,00,000 electric scooter, that is a meaningful 5-6% reduction.

Eligibility Criteria for Electric Two and Three-Wheelers

Not every electric two-wheeler or three-wheeler qualifies for the central subsidy. The eligibility rules are designed to promote advanced battery technology and domestic manufacturing. Here is what you need to verify before assuming your purchase will be subsidized:

• The vehicle must be registered under the Central Motor Vehicle Rules and hold a valid road registration.
• The EV must use an advanced chemistry battery—lithium-ion or equivalent. Lead-acid batteries are strictly excluded 11.
• The model must be approved and listed by an eligible original equipment manufacturer (OEM) under the scheme.
• The ex-factory price of the vehicle must fall below the government's official price caps for its category.
• One vehicle per Aadhaar number is allowed under the scheme 10.
• For electric two-wheelers, both privately owned and commercially registered vehicles are eligible. For electric three-wheelers, the scheme prioritizes commercial and public transport use 2.

If you are a fleet operator, note that vehicles purchased by central or state government departments or their agencies are not eligible for PM E-DRIVE demand incentives, as it would amount to transferring funds between government heads 2. Private fleet operators and aggregators, however, can claim the incentive for eligible vehicles.

How to Claim Your Subsidy: Step-by-Step

The good news for buyers is that claiming the PM E-DRIVE subsidy requires almost no paperwork on your end. The system is designed so that the subsidy is applied as an upfront discount at the dealership, with the dealer and manufacturer handling verification and reimbursement from the government. Here is the process:

1. Verify model eligibility. Before visiting a showroom, check that the specific model you want is registered under the PM E-DRIVE scheme. Your dealer should have this information, or you can check the Ministry of Heavy Industries notifications.
2. Purchase from an authorized dealer. Only dealers participating in the scheme can apply the subsidy. Most major EV brands—TVS, Bajaj, Ather, Hero, Mahindra, and others—have authorized dealers that process subsidies 6.
3. Provide your Aadhaar details. The dealership will authenticate your Aadhaar for the subsidy claim. Remember, only one vehicle per Aadhaar is permitted 10.
4. Receive the discounted price. The subsidy amount is deducted from the showroom price before you pay. You do not need to wait for a government transfer.
5. The dealer handles the rest. After purchase, the manufacturer or dealer uploads your purchase details to the scheme portal for government verification and reimbursement 4.

For state-level subsidies, the process can vary. Some states apply the discount at the dealership, while others require you to register the vehicle at the RTO and then apply through a state portal with your invoice and a cancelled cheque for direct benefit transfer 11.

State-Level Subsidies: The Hidden Bonus

Central subsidies are only half the story. Several Indian states offer their own EV incentives that stack on top of PM E-DRIVE, often making the total discount significantly larger. Delhi, Maharashtra, Gujarat, Tamil Nadu, and others have introduced state-specific policies with varying rates and eligibility criteria 4.

For example, some states offer tapering subsidies for two-wheelers, with higher amounts for early buyers that reduce over the policy period. A state might offer ₹10,000 per kWh in Year 1, dropping to ₹3,300 per kWh by Year 3 11. Other states provide additional benefits like road tax exemptions, registration fee waivers, or scrappage incentives for old vehicles.

The key takeaway: always check your state's current EV policy before finalizing a purchase. A buyer in one state may receive ₹15,000 in combined central and state benefits, while a buyer in another state with no active policy receives only the ₹5,000 central cap.

Subsidy Impact on Real-World Pricing

Let us put the subsidy into perspective with a concrete example. Consider an electric scooter with a 2 kWh battery pack, priced at ₹85,000 ex-showroom.

• Central PM E-DRIVE subsidy: 2 kWh × ₹2,500 = ₹5,000 (capped at ₹5,000)
• Effective price after central subsidy: ₹80,000
• If your state offers a 50% matching subsidy: additional ₹2,500 off
• If your state offers a fixed ₹5,000 incentive: additional ₹5,000 off
• Potential final price with stacked subsidies: ₹75,000 or lower

For electric three-wheelers, the math is different. A typical e-rickshaw or L5 category three-wheeler may have a 4-6 kWh battery. At ₹2,500 per kWh capped at ₹25,000, the central subsidy could cover a significant portion of the battery cost, making commercial fleet economics far more attractive.

Common Mistakes Buyers Make

• Assuming all electric two-wheelers qualify. Low-speed scooters with lead-acid batteries or non-approved models are excluded. Verify before you buy.
• Buying from an unauthorized dealer. If the dealer is not enrolled in the subsidy scheme, you will not receive the point-of-sale discount.
• Missing state subsidy deadlines. State policies often have limited budgets or early-bird caps. Waiting can mean losing thousands of rupees in benefits.
• Using a family member's Aadhaar to claim a second vehicle. The one-vehicle-per-Aadhaar rule means you cannot claim multiple subsidies on the same identity.
• Forgetting about the ex-factory price cap. Even if a model is technically eligible, if its ex-factory price exceeds the cap, no subsidy applies.

What the Future Holds for EV Subsidies

The extension of electric two-wheeler subsidies to March 2028 signals that the government sees continued value in supporting the segment. However, a senior official noted that subsidies may need to continue only until electric two-wheelers reach 10% of total two-wheeler sales 9. In August 2026, electric two-wheelers accounted for 10.7% of total two-wheeler retail—already crossing that threshold 6.

For electric three-wheelers, the writing is on the wall. With EV penetration at 65.3% of the three-wheeler market, the segment has achieved mainstream status and no longer requires demand incentives to sustain growth 6 9. Fleet operators should plan for a future without central subsidies in this category.

What does this mean for buyers? The current subsidy rates are likely near their peak. If you are on the fence about purchasing an electric two-wheeler, the combination of central incentives, possible state top-ups, and relatively stable battery prices makes 2026 a favorable window.

Conclusion

FAME II laid the foundation. EMPS bridged the gap. PM E-DRIVE is now writing the next chapter. For electric two and three-wheeler buyers in India, the current subsidy framework offers meaningful financial support—up to ₹5,000 for two-wheelers and up to ₹25,000 for three-wheelers—with a claim process that is genuinely simple.

The biggest variable is not the central subsidy but the state-level incentives that stack on top. A few minutes spent researching your state's current EV policy can translate into thousands of rupees saved. And if you are a fleet operator, the economics of electric three-wheelers—even without subsidies—are compelling enough to justify the transition.

Subsidies lower the entry barrier, but they should not be the only reason to buy electric. With lower running costs, reduced maintenance, and improving charging infrastructure, the total cost of ownership already favors electric two and three-wheelers in most Indian use cases. The subsidy is simply the accelerant.

Whether you are buying your first electric scooter or electrifying a delivery fleet, understand the current landscape, verify eligibility, and act while the incentives remain favorable. The road ahead is electric—and the numbers make a strong case for getting on it sooner rather than later.