A Parliamentary Standing Committee has recommended the introduction of a targeted consumer subsidy for electric four-wheelers, warning that high upfront costs are slowing adoption of electric cars in India despite policy support for EV manufacturing.
The recommendation is part of the 332nd report of the Department-Related Parliamentary Standing Committee on Industry, presented in Parliament on 11 March.
The panel examined the Demands for Grants for the Ministry of Heavy Industries for 2026-27 and reviewed the progress of key schemes related to electric mobility, manufacturing and capital goods.
The Committee noted with concern that electric four-wheelers (e-4Ws) are not covered under the ₹10,900 crore PM E-DRIVE Scheme, despite the significantly higher upfront cost of e-4Ws vis-à-vis conventional internal combustion engine (ICE) vehicles acting as a deterrent for prospective buyers.
While manufacturing incentives are available through the Production Linked Incentive scheme for automobiles and auto components, the committee observed that these incentives do not directly mitigate the affordability gap faced by end consumers.
It therefore recommended the ministry to urgently introduce a targeted and time-bound consumer incentive mechanism for electric four-wheelers under the PM E-DRIVE framework or through a dedicated sub-scheme.
According to the committee, incentives for electric cars could be structured in a calibrated manner linked to battery capacity, vehicle efficiency, and price caps to ensure fiscal prudence while effectively bridging the cost differential between EVs and ICE vehicles.
The panel also suggested the ministry to institute a periodic impact assessment to evaluate whether PLI manufacturing incentives are translating into tangible reductions in retail prices and improved consumer accessibility.
The report also reviewed the overall progress of the PM E-DRIVE scheme, which has a total outlay of ₹10,900 crore for the period from April 2024 to March 2028.
As of 31 January 2026, a total of 16,56,335 electric vehicles had been incentivised under the scheme against a revised target of 28,26,634 units.
However, the committee noted that progress remains heavily concentrated in the electric two-wheeler and electric three-wheeler segments.
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Electric trucks, electric buses and electric ambulances recorded no nil achievement under the scheme, while electric rickshaw and e-cart adoption has remained far below targets.
The panel also raised concerns regarding delays in EV incentive disbursement to manufacturers.
Claims relating to 2,32,588 electric vehicles were under processing for reimbursement as of 31 January 2026, with verification delays attributed to incomplete integration of state vehicle registration portals with the national VAHAN platform and availability of masked customer data, which hindered verification.
The panel recommended establishing a robust and fully integrated digital verification mechanism with all states/Union Territories to ensure seamless, real-time validation of vehicle registration data.
It also advised institutionalising a time-bound framework for processing and disbursing eligible claims, particularly in high-volume segments, so that OEMs do not face working capital constraints due to reimbursement delays.
In addition to demand-side challenges, the committee highlighted gaps in charging infrastructure expansion.
The panel noted that preparatory work for public EV charging stations under the PM E-DRIVE scheme has been completed, but utilisation of funds remains limited.
The committee recommended revising the subsidy structure to encourage greater private participation in commercially viable charging locations.
The report also flagged slow progress in battery manufacturing under the Production Linked Incentive scheme for Advanced Chemistry Cell battery storage.
While the scheme aims to create 50 GWh of manufacturing capacity, only 40 GWh has been awarded so far, and just 1 GWh has been commissioned, with the remaining 39 GWh under commissioning.
The committee further expressed concern over India’s dependence on imported rare earth minerals and critical battery materials, noting that supply chains are heavily dominated by a few countries including China.
It recommended strengthening international partnerships, accelerating domestic exploration and promoting alternative battery chemistries suited to Indian conditions.
