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EV Subsidies in India
Feb 20, 2023

EV Subsidies in India: Incentives for Cars, Bikes, Scooters & Commercial Vehicles

To promote the usage of electric vehicles and reduce the dependency on vehicles powered by fossil fuels, the Indian government launched the electric vehicle policy. This policy aims to increase awareness of how electric vehicles are more beneficial and better. Under this policy, subsidies are offered to attract more people and get them to purchase electric vehicles. If you are looking to purchase an electric vehicle, do not forget to purchase electric vehicle insurance along with it. Let us know more about this policy and the benefits offered under it.

What is an Electric Vehicle?

An electric vehicle (EV) is a type of vehicle that runs on electric current instead of fossil fuels such as petrol or diesel. In a normal vehicle, the internal combustion engine (ICE) uses fossil fuel to power itself and the vehicle. In EVs, electric batteries are used to power the vehicle. The engine used in EVs has zero emissions, reducing the amount of pollution generated. Fully electric vehicles and Hybrid electric vehicles are a few types of EVs.

Electric Vehicle Policy in India

To electrify public and private transportation in India, the Indian government laid a roadmap for it. Under one of the government policies on electric vehicles in India, the FAME scheme was launched. It stands for Faster Adoption and Manufacture of Electric and Hybrid Vehicles in India. Under this scheme, manufacturers and suppliers get incentives.

What is the FAME scheme?

Launched in 2015, the FAME scheme was devised to drive the production and sales of electric vehicles in India. To promote the growth and sales of electric bikes, cars and commercial vehicles, the manufacturers received heavy incentives. The 1st phase of the FAME scheme was launched back in 2015 and ended on 31st March 2019. The 2nd phase of the scheme was launched in April 2019 and will end on 31st March 2024.

What are the features of this scheme?

The following were the features of the 1st phase:
  1. Creating demand, focusing on technology, and building the infrastructure for charging stations.
  2. During the 1st phase, the government installed about 427 electric charging stations.
The following are the features of the 2nd phase:
  1. Emphasis on the electrification of public transport.
  2. Govt budget of Rs.10,000 crores.
  3. For electric two-wheelers, an incentive of Rs.20,000 each would be given for 10 lakh registered vehicles.

What is the FAME subsidy?

In the 2nd phase of the FAME scheme, different states provide subsidies for electric vehicles. Given below is the list of states providing subsidies on electric scooters and bikes:
State Subsidy (per kWh) Maximum subsidy Road tax exemption
Maharashtra Rs.5000 Rs.25,000 100%
Gujarat Rs.10,000 Rs.20,000 50%
West Bengal Rs.10,000 Rs.20,000 100%
Karnataka - - 100%
Tamil Nadu - - 100%
Uttar Pradesh - - 100%
Bihar* Rs.10,000 Rs.20,000 100%
Punjab* - - 100%
Kerala - - 50%
Telangana - - 100%
Andhra Pradesh - - 100%
Madhya Pradesh - - 99%
Odisha NA Rs.5000 100%
Rajasthan Rs.2500 Rs.10,000 NA
Assam Rs.10,000 Rs.20,000 100%
Meghalaya Rs.10,000 Rs.20,000 100%
*Policy yet to be approved in Bihar and Punjab Given below is the list of states providing subsidies on cars and SUVs:
State Subsidy (per kWh) Maximum subsidy Road tax exemption
Maharashtra Rs.5000 Rs.2,50,000 100%
Gujarat Rs.10,000 Rs.1,50,000 50%
West Bengal Rs.10,000 Rs.1,50,000 100%
Karnataka - - 100%
Tamil Nadu - - 100%
Uttar Pradesh - - 75%
Bihar* Rs.10,000 Rs.1,50,000 100%
Punjab* - - 100%
Kerala - - 50%
Telangana - - 100%
Andhra Pradesh - - 100%
Madhya Pradesh - - 99%
Odisha NA Rs.1,00,000 100%
Rajasthan - - NA
Assam Rs.10,000 Rs.1,50,000 100%
Meghalaya Rs.4000 Rs.60,000 100%

Subsidy on commercial electric vehicles

Under the FAME scheme, commercial electric vehicles such as e-buses, rickshaws and other vehicles also got the benefit of subsidies. These subsidies are:
  1. An incentive of Rs.20,000 per kWh is offered to the state transport units to push the purchase of e-buses. This subsidy is subject to the bids provided by OEMs.
  2. E-buses costing less than Rs.2 crores and commercial hybrid vehicles costing less than Rs.15 lakhs are eligible for this incentive
  3. E-rickshaws or other electric three-wheelers costing below Rs.5 Lakhs are also eligible for this incentive

Electric vehicles and insurance

While the government Is heavily promoting the Electric Vehicle Policy in India, there is a lower awareness when it comes to electric vehicle insurance. Due to the build and the technology used in the vehicle, it is important to insure your electric vehicle with an insurance policy. For example, if you purchase an electric car and it gets damaged in an accident, the cost of the repairs could cause you a huge financial burden. Especially if a major component of the car were to get damaged. Insuring your car with electric car insurance means not having to worry about the cost of repairs. Similarly, if your electric bike were to get damaged in floods, and its functionality gets affected due to it, it could mean a total financial loss for you. However, your electric bike insurance can ensure that you are financially compensated in the event of total damage caused to your vehicle*. If you own an e-rickshaw and it causes damage to a third-party vehicle and injures someone, the cost of repair and medical treatment would have to be borne by you. Having your commercial vehicle insured by electric commercial vehicle insurance means not only is the third-party compensated for the damage caused to their vehicle, but also, any person who is injured is compensated for the medical treatment as well*.


With these subsidies, you do not have to think more than once to purchase an electric vehicle. And you can enjoy the financial protection offered under electric vehicle insurance.   *Standard T&C apply Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.  

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