Thinking of buying an electric vehicle but worried about the high upfront cost? You’re not alone—and the good news is that the Indian government offers multiple government grant for buying electric vehicle in India at both the central and state levels that can significantly reduce your purchase price. From the flagship PM E-Drive scheme to state-specific EV subsidies, income tax deductions, and subsidised loans—there has never been a better time to switch to electric.
Whether you want to buy an electric two-wheeler for daily commuting, an electric car for your family, an e-auto for a business livelihood, or an electric bus for your transport fleet—this guide covers every central and state government EV subsidy, grant, and financial incentive available in India in 2026.
Key stat: India’s EV sales crossed 1.7 million units in FY2024, driven largely by government subsidies and incentives. The government has committed over Rs. 10,900 crore under the PM E-Drive scheme to accelerate EV adoption through 2026.
Why Does the Government Offer Grants for Buying Electric Vehicles in India?
The Indian government’s EV subsidy programme is driven by three national priorities: reducing air pollution in cities, cutting India’s dependence on imported crude oil (which costs over $100 billion annually), and meeting India’s commitment to net-zero emissions by 2070 under the Paris Agreement.
To achieve these goals, the government incentivises EV adoption by reducing the purchase price through direct subsidies (demand incentives), reducing GST on EVs, offering income tax deductions on EV loans, and mandating state governments to create their own EV policies.
Central vs. State EV Grants — What’s the Difference?
| Feature | Central Government Grant | State Government Grant |
| Authority | Ministry of Heavy Industries (MHI) | State Transport / Energy Dept. |
| Scheme Names | PM E-Drive, FAME II, EMPS | Delhi EV Policy, MH EV Policy, etc. |
| How Applied | Direct price reduction at dealer | Reimbursement or direct reduction |
| Stackable? | Yes — can combine with state | Yes — can combine with central |
| Eligibility | Pan-India, category-specific | State residents only |
Central Government Schemes: Grants for Buying Electric Vehicles in India
1. PM E-Drive Scheme (2024–2026) — The Current Flagship Scheme
- The PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-Drive) scheme was launched in September 2024 with a total outlay of Rs. 10,900 crore to support EV adoption across two-wheelers, three-wheelers, buses, and charging infrastructure through FY2026.
- Electric two-wheelers: Subsidy of Rs. 5,000 per kWh of battery capacity, capped at Rs. 10,000 per vehicle
- Electric three-wheelers (e-rickshaw / e-auto): Rs. 25,000 – Rs. 50,000 per vehicle, depending on category
- Electric buses: Rs. 20 lakh – Rs. 40 lakh per bus for state transport undertakings
- Charging infrastructure: Rs. 2,000 crore allocated for public EV charging stations across highways and cities
PM E-Drive replaced the earlier EMPS (Electric Mobility Promotion Scheme) from October 2024. If you bought an EV between April and September 2024, your subsidy came under EMPS. From October 2024 onwards, it falls under PM E-Drive.
2. FAME II Scheme — Background and Legacy
The Faster Adoption and Manufacturing of Electric Vehicles Phase II (FAME II) scheme ran from 2019 to March 2024 with an outlay of Rs. 11,500 crore. While FAME II has now concluded, many dealers still have approved FAME II stock. Under FAME II, subsidies ranged from Rs. 10,000 to Rs. 1.5 lakh depending on vehicle type and battery capacity.
If a dealer offers you a FAME II-subsidised vehicle in 2026, verify the approval status — only vehicles on the MHI’s approved vehicle list were eligible. The scheme has transitioned to PM E-Drive for new purchases.
3. GST Reduction on Electric Vehicles
The GST Council has reduced GST on electric vehicles to just 5% (down from 12%) — compared to 28%–48% (with cess) on petrol and diesel vehicles. This alone saves buyers Rs. 50,000 – Rs. 3,00,000 on electric cars depending on the vehicle price. EV chargers attract 5% GST, and EV batteries attract 18% GST (reduced from 28%).
4. Income Tax Deduction Under Section 80EEB
Section 80EEB of the Income Tax Act allows individual taxpayers who take a loan to purchase an electric vehicle to claim a deduction of up to Rs. 1,50,000 per year on the interest paid on that EV loan. This benefit is available for both personal and commercial EVs purchased by individuals, making EV loans significantly more tax-efficient than car loans for petrol/diesel vehicles.
State Government EV Grants and Subsidies in India (2026)
In addition to central government schemes, most Indian states have their own EV policies offering additional purchase subsidies, road tax exemptions, and registration fee waivers. Here is a state-by-state summary of the most generous EV incentives:
| State | 2-Wheeler Subsidy | 4-Wheeler Subsidy | Road Tax | Reg. Fee |
| Delhi | Rs. 5,000/kWh (up to Rs. 30,000) | Rs. 1,50,000 | Exempt | Exempt |
| Maharashtra | Rs. 10,000 | Rs. 1,00,000 | Exempt | Exempt |
| Gujarat | Rs. 10,000 – Rs. 20,000 | Rs. 1,50,000 | Exempt | Exempt |
| Tamil Nadu | Rs. 15,000 | Rs. 50,000 | Exempt | Waived |
| Rajasthan | Rs. 10,000 | Rs. 50,000 | Exempt | Exempt |
| Karnataka | Rs. 10,000 | Rs. 25,000 | Exempt | Waived |
| Uttar Pradesh | Rs. 5,000 | Rs. 1,00,000 | 100% Exempt | Exempt |
| West Bengal | Rs. 10,000 | Rs. 50,000 | Exempt | Waived |
Note: State subsidies are updated periodically. Always verify current amounts on your state transport department’s official website before purchasing.
How Much Total Grant Can You Get When Buying an EV in India?
By stacking central government grants, state subsidies, GST savings, registration fee waivers, and tax deductions, the total financial benefit can be substantial. Here is a realistic example:
| Benefit Type | Electric Two-Wheeler | Electric Car |
| PM E-Drive Central Subsidy | Up to Rs. 10,000 | Not applicable (cars) |
| State Purchase Subsidy (e.g. Delhi) | Up to Rs. 30,000 | Up to Rs. 1,50,000 |
| GST Saving vs Petrol Vehicle | Rs. 5,000 – Rs. 15,000 | Rs. 1,00,000 – Rs. 3,00,000 |
| Road Tax Exemption (1-time) | Rs. 2,000 – Rs. 8,000 | Rs. 50,000 – Rs. 2,00,000 |
| Registration Fee Waiver | Rs. 500 – Rs. 1,500 | Rs. 5,000 – Rs. 15,000 |
| Section 80EEB Tax Benefit (annual) | Up to Rs. 1,50,000 (loan interest) | Up to Rs. 1,50,000 |
| Total Estimated Benefit | Rs. 40,000 – Rs. 60,000 | Rs. 3,00,000 – Rs. 6,00,000+ |
Real-world example: A Delhi resident buying a Rs. 1.2 lakh electric scooter under PM E-Drive + Delhi EV Policy + GST savings could reduce the effective cost to under Rs. 80,000 — a saving of over 33% on the sticker price.
How to Claim a Government Grant for Buying Electric Vehicle in India
Claiming EV subsidies in India is simpler than most people think — for most buyers, the subsidy is automatically deducted at the point of sale by the dealer. Here is the full process:
Step 1: Check Eligibility
- Confirm your vehicle is on the MHI’s approved EV list at fame2.heavyindustry.gov.in or the PM E-Drive portal
- Check your state’s EV policy to see which vehicle categories qualify for additional state subsidies
- Ensure you are buying from an authorised dealer registered under the scheme
Step 2: Visit an Authorised EV Dealer
- Go to an OEM-authorised EV dealership (Ola Electric, Ather, TVS, Tata Motors, MG, Hyundai, etc.)
- Ask the dealer specifically about PM E-Drive subsidy and your state’s applicable subsidy for the model you want
- The dealer will show you the ex-showroom price, the applicable subsidy, and the final on-road price after deduction
Step 3: Submit Documents at Dealership
- Aadhaar card (mandatory for subsidy claim)
- PAN card
- Address proof (for state subsidy — must match the state’s eligibility criteria)
- Bank account details (for states that offer direct benefit transfer instead of upfront deduction)
- Mobile number linked to Aadhaar (for OTP-based verification)
Step 4: Subsidy is Deducted at Purchase or Reimbursed
- For central PM E-Drive subsidies: deducted upfront from the invoice by the dealer — you pay the net price
- For state subsidies: some states deduct upfront (Delhi, Gujarat), while others reimburse within 30–90 days via DBT to your bank account
- Collect your subsidy acknowledgement receipt from the dealer for your records
Step 5: Apply for EV Loan with 80EEB Tax Benefit
- Apply for an EV loan from SBI, Bank of Baroda, HDFC, or any bank offering preferential EV loan rates
- Ensure the loan sanction letter mentions the vehicle as an electric vehicle
- Claim interest deduction under Section 80EEB while filing your annual income tax return
Bank Loan Schemes and Subsidised Financing for EV Buyers in India
Beyond government grants, several public sector banks offer preferential interest rates and concessional loans for EV buyers — making EV financing more affordable than standard vehicle loans.
| Bank / Lender | EV Loan Scheme | Interest Rate | Special Feature |
| State Bank of India | SBI Green Car Loan | 8.65% onwards | 0.20% concession vs standard |
| Bank of Baroda | Baroda E-Vehicle Loan | 8.70% onwards | No processing fee |
| Union Bank of India | Union Green Miles | 8.75% onwards | 100% on-road financing |
| HDFC Bank | EV Auto Loan | 8.80% onwards | Flexible tenure up to 7 years |
| Canara Bank | Canara Vehicle Loan (EV) | 8.65% onwards | Concession for women borrowers |
| SIDBI (for businesses) | SIDBI EV Financing | Subsidised rate | For EV fleet operators & MSMEs |
Pro tip: Combine a subsidised EV loan with the Section 80EEB tax deduction. On a Rs. 8 lakh EV loan at 8.7% interest, the annual interest of ~Rs. 70,000 is fully deductible — saving Rs. 21,000+ in taxes for someone in the 30% bracket.
Common Mistakes to Avoid When Claiming EV Government Grant in India
- Buying a non-approved vehicle: Only vehicles on the MHI’s approved list qualify — always verify before purchasing
- Missing Aadhaar-mobile linkage: Subsidy claims require OTP verification on your Aadhaar-linked mobile — ensure it is active
- Wrong state residency documents: State subsidies require address proof matching the state — an outstation buyer cannot claim Delhi’s EV subsidy
- Not asking the dealer about all applicable subsidies: Some dealers only apply central subsidies and skip state schemes — always ask explicitly
- Ignoring the 80EEB deduction: Many EV buyers miss this tax benefit simply because their CA or bank does not mention it — claim it every year on your ITR
- Buying from unauthorised dealers: Grey market or unauthorised EV sellers are not registered under PM E-Drive — you will not receive the subsidy
- Delaying registration: Some state subsidies have a time limit from the date of purchase for claiming reimbursement — don’t delay registration
Conclusion
The government grants for buying an electric vehicle in India have never been more comprehensive. Between the PM E-Drive scheme, state-level subsidies, GST cuts, registration waivers, and the Section 80EEB income tax deduction, a smart EV buyer in India today can save anywhere from Rs. 40,000 on an electric scooter to over Rs. 5 lakh on an electric car compared to a comparable petrol vehicle.
The key is to research before you buy: verify your vehicle is on the approved list, confirm both central and state subsidies applicable to your state, choose an authorised dealer, and keep your Aadhaar and documents ready. The savings are real, significant, and waiting to be claimed.
Quick Action Checklist Before Buying Your EV:
- Check your vehicle model on MHI’s approved PM E-Drive list
- Look up your state’s current EV subsidy amount and eligibility criteria
- Ensure your Aadhaar is linked to your active mobile number
- Ask your dealer for a detailed subsidy-applied invoice before signing
- Apply for an EV loan from a public sector bank for the 80EEB tax benefit
- Register your vehicle promptly to avoid missing state reimbursement windows
- Claim Section 80EEB deduction every year when filing your ITR
Explore more guides on EV business opportunities, MSME government schemes, and startup funding on BiznesIdea.com.
FAQs
Que 1. Is there a government grant for buying an electric car in India in 2025?
Ans. Yes. While the PM E-Drive scheme’s direct purchase subsidy in 2025 primarily covers electric two-wheelers, three-wheelers, and buses, electric car buyers benefit from significant GST savings (5% vs 28%+ on petrol cars), road tax exemption, registration fee waiver, and state-level purchase subsidies of up to Rs. 1,50,000 in states like Delhi and Gujarat. The Section 80EEB income tax deduction of up to Rs. 1,50,000 per year on EV loan interest also applies to car buyers.
Que 2. How much subsidy can I get on an electric two-wheeler in India?
Ans. Under the PM E-Drive scheme, you can get a central subsidy of Rs. 5,000 per kWh of battery capacity, capped at Rs. 10,000 per vehicle. Additionally, your state may offer Rs. 5,000 to Rs. 30,000 in extra subsidies (Delhi offers the highest). Combined with GST savings and road tax exemption, total savings on an electric scooter can range from Rs. 20,000 to Rs. 60,000 depending on the model and state.
Que 3. Can I get both central and state government EV subsidies together?
Ans. Yes, central and state government EV subsidies are fully stackable. You can claim the PM E-Drive central subsidy and your state’s additional subsidy simultaneously on the same vehicle purchase. The central subsidy is deducted by the dealer, while some states also apply theirs at the point of sale, while others reimburse via direct bank transfer after registration.
Que 4. Which electric vehicles are approved under PM E-Drive scheme in 2025?
Ans. The Ministry of Heavy Industries maintains an approved vehicle list under the PM E-Drive scheme. Approved brands include Ola Electric, Ather Energy, TVS, Hero Electric, Bajaj (Chetak), Tata Motors (for buses), and many others. Always check the latest approved list on the official MHI or FAME portal before purchasing, as new models are added and old approvals can expire.
Que 5. What is Section 80EEB and who can claim it?
Ans. Section 80EEB of the Income Tax Act, 1961 allows individual taxpayers (not companies or HUFs) to deduct up to Rs. 1,50,000 per financial year on the interest paid on a loan taken to purchase any electric vehicle — two-wheeler, three-wheeler, or four-wheeler. The loan must be sanctioned between April 1, 2019 and March 31, 2023 (original window), though extensions may apply — check the latest ITR guidelines for the current status.
