In a significant development for India's electric vehicle sector, the Ministry of Heavy Industries has formally requested the finance ministry to shift the allocation of ₹4,891 crore meant for promoting e-trucks and e-buses to next year's budget. This move comes as the government faces challenges in disbursing incentives under the PM E-Drive scheme due to component localization hurdles and supply chain disruptions.
Budget Reallocation Request
According to sources familiar with the matter, the heavy industries ministry made this request during budget consultations held in October. The ministry has asked that the outlay for e-trucks and e-buses under the PM E-Drive scheme be shifted to the next fiscal year, with most disbursals now expected to occur in FY27. This represents a major recalibration of the government's electric mobility promotion strategy.
The original allocation under the PM E-Drive scheme included ₹4,391 crore for e-buses and ₹500 crore specifically for e-trucks. The scheme was initially designed to run for two years from FY24 to FY26, with ambitious targets to put 14,028 e-buses and 5,643 e-trucks on Indian roads by FY26.
Scheme Extension and Current Status
In response to the implementation challenges, the government has already extended the incentive scheme for e-trucks and e-buses by two years until FY28. This extension was announced in August after no disbursals were made in these vehicle segments during the current fiscal year.
No e-truck or e-bus models have received government approval yet, which is a prerequisite for claiming incentives under the scheme. The delay in approvals has been attributed to difficulties in meeting localization criteria and ongoing supply chain disruptions affecting manufacturers.
Manufacturing and Supply Chain Challenges
The core issue facing electric commercial vehicle manufacturers revolves around component localization norms. Truck manufacturers have been waiting for localization approvals for four months since the component guidelines were published. Similarly, the country's largest e-bus tender for 10,900 vehicles has been delayed by at least three months.
Amit Bhatt, India Director of the International Council on Clean Transportation, explained the situation: "OEMs have faced a tough time this year with supply chain disruptions, and given that India's supply chains are still growing. This could give a little more time to OEMs to meet localization standards."
Cost Comparison and Market Reality
The financial challenge in adopting electric commercial vehicles remains substantial. Electric buses typically cost between ₹1-1.25 crore, compared to ₹25-50 lakh for their diesel counterparts. Similarly, heavy electric trucks (above 12 tonnes) are priced at ₹1-1.5 crore, while diesel trucks in the same category cost ₹25-50 lakh.
The current market size highlights the nascent stage of electric commercial vehicles in India. The e-bus market sees approximately 3,500 units sold annually, while the e-truck segment remains particularly underdeveloped with only about 400 heavy trucks sold this year.
The government had set import cutoff dates for various e-truck components, with some deadlines already passing on September 1, 2025, and others extending until March 1, 2026. In a partial relief measure, the government relaxed localization rules for rare earth magnets in September, allowing imports of traction motors containing these magnets until domestic supplies resume.
This budget reallocation decision reflects the practical challenges India faces in its transition to electric mobility for commercial vehicles, balancing ambitious targets with ground realities of manufacturing capabilities and supply chain readiness.
