Thursday, July 31, 2025

Unused E-Rickshaw Subsidies May Be Reallocated to Cargo Electric 3-Wheelers Under PM E-DRIVE

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In response to soaring demand for cargo electric three-wheelers (L5 e3Ws), the Centre is considering reallocating unused subsidies originally earmarked for underperforming e-rickshaws and e-carts. The move comes as sales of L5 e3Ws have significantly outpaced expectations under the PM E-DRIVE scheme.

According to government officials, over 1.55 lakh L5 electric cargo three-wheelers were sold by the end of May 2025, achieving more than 75% of the scheme’s target for this segment well ahead of schedule.

“Sales of eligible e-rickshaws and e-carts have lagged. Subsidies earmarked for them will be used for L5 e3Ws, where strong demand is being registered,” a senior official told The Economic Times.


In contrast, e-rickshaw and e-cart sales have been sluggish, with only 2,736 units sold so far—just 2% of the targeted 1.10 lakh units under the scheme. This stark underperformance has led policymakers to explore subsidy realignment to support segments showing stronger market traction.

Under the ₹500 crore PM E-DRIVE scheme, launched in September 2024, incentives are provided for electric two-wheelers, three-wheelers, cargo e3Ws, e-buses, charging infrastructure, and testing facilities.

  • The scheme offers ₹5,000 per kWh incentive for domestically manufactured electric 2W and 3W vehicles registered on or after April 1, 2025.
  • These incentives will continue until March 2026, or until the subsidy pool is exhausted.

  • ₹515 crore was earmarked for 2,05,392 L5 cargo e3Ws
  • ₹300 crore was allocated for 1,10,596 e-rickshaws and e-carts

With the cargo e3W segment rapidly nearing its limit, and e-rickshaws showing negligible uptake, the government is preparing to divert remaining funds from low-performing segments to support high-demand ones.

In November 2024, ET reported that L5 e3W sales had already met the full-year quota within weeks of launch. This prompted the Centre to amend the scheme, reducing per-unit incentives and tapping into subsidies allocated for FY 2025–26, ensuring the momentum could be sustained.


As India’s EV market evolves, policymakers are pivoting to ensure government incentives support the most impactful segments. The proposed reallocation from e-rickshaws to cargo e3Ws reflects a strategic shift to align subsidies with actual adoption trends, boosting last-mile logistics electrification.

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