India’s big-ticket electric vehicle subsidies have an expiry date, and the country’s auto giants are already preparing for life after it. The incentives run out on 31 March 2028, and at least two major makers, Bajaj Auto and Tata Motors, have begun working to cut manufacturing costs so their EVs can stand on their own, according to a report published on Wednesday 4 November.
What is ending, and when
The production-linked incentive (PLI) scheme for automobiles and auto components rewards manufacturers for incremental sales of advanced automotive technology products, including EVs, while the PM E-DRIVE scheme provides demand-side incentives to lower purchase costs, TradingView’s report explains. The PLI scheme carries an outlay of Rs.25,938 crore and the PM E-DRIVE scheme a budget of Rs.11,900 crore. HSBC Global Investment Research estimated in September that EV subsidies will decline by at least 50% over the next four to five years.
How the makers are responding
Bajaj Auto’s chief financial officer Dinesh Thapar said the PLI scheme had contributed to an improvement in the company’s EV profitability, but that it was already working to reduce costs and prepare for its eventual withdrawal, according to the report. Bajaj reported EV revenue of almost Rs.5,500 crore in the first half of FY27, about 34% of its domestic revenue. Tata Motors has also acknowledged the need to prepare for a post-incentive environment, and has outlined a strategy to make its EV business profitable without subsidies, including expanding its line-up from six models to ten by FY31 and deepening localisation of battery packs and drive systems.
The choice facing buyers
Analysts quoted in the coverage warn that any reduction in subsidies has to be compensated for by lower manufacturing costs or higher vehicle prices passed to customers. EV sales have surged in India, with two-wheelers crossing the 10% mark and cars exceeding 8% of vehicle sales, but the next 18 months will test whether that growth survives without taxpayer support. For buyers, the message is to check what portion of a quoted EV price is subsidy-dependent before assuming today’s price will hold.
