Quick Highlights:Government to end subsidies for electric two- and three-wheelers after current fiscal year.Electric three-wheelers have achieved over 30 percent penetration, but scooters remain under 10 percent.Policy focus shifts from consumer subsidies to infrastructure, recycling, and commercial EV support.Industry expected to face short-term slowdown but long-term innovation push.India’s electric mobility ecosystem is entering a decisive new phase as the government confirms it will not extend subsidies for electric two-wheelers and three-wheelers beyond the current fiscal year. This marks the end of a decade-long policy era shaped by the FAME scheme and later the PM E-Drive program, both designed to reduce the price gap between battery-powered and petrol vehicles. The new stance indicates a clear policy pivot: India wants its EV market to mature without relying on direct purchase incentives.According to officials, electric three-wheelers have successfully crossed the 30 percent market penetration mark. This has been cited as the primary rationale for withdrawing financial support. In this segment, the economics already work strongly in favor of electrification. Commercial drivers benefit from significant savings in fuel and maintenance, making electric three-wheelers a natural choice without the need for subsidies. Their widespread adoption in urban and semi-urban areas demonstrates this self-sustaining demand.However, the situation looks different for electric scooters. Despite rapid growth in the last few years, the segment still represents less than 10 percent of the overall two-wheeler market. Many industry experts argue that a continued subsidy framework could have accelerated adoption further, especially given price sensitivity among middle-class and rural two-wheeler buyers. Without incentives, pricing pressures are expected to intensify, and consumer hesitation may rise in the near term.With the withdrawal of subsidies, manufacturers must now rely on operational efficiency, scale, and localization to maintain competitive pricing. Established companies such as TVS Motors, Ola Electric, Ather Energy, and Bajaj Auto are better positioned to manage this transition. These players have already invested in vertically integrated production, proprietary battery packs, streamlined supply chains, and component localization. As incentives fade, their ability to reduce costs through in-house engineering and manufacturing will be crucial.On the other hand, small and mid-sized EV start-ups may find the shift more challenging. Several of them have depended on subsidies to offer competitive pricing against market leaders. The removal of purchase incentives could widen the price disadvantage for these companies, potentially leading to consolidation. Some may pivot to niche segments, while others could struggle to survive. Analysts believe the industry may see mergers, acquisitions, and strategic alliances as smaller firms seek financial resilience.For consumers, the immediate impact will be visible at the point of purchase. Electric scooters and three-wheelers could become more expensive, making affordability a central concern. While EVs continue to offer significantly lower running and maintenance costs, initial pricing will strongly influence buying decisions. This is particularly important in a market where over 70 percent of two-wheeler buyers fall within price-sensitive segments.Even as direct purchase incentives for personal EVs expire, the government is expanding support for commercial and public transport electrification. Subsidies for electric buses, trucks, and ambulances have been extended until March 2028. This reflects a strategic realignment toward high-mileage, high-impact vehicle categories that can directly influence emissions, urban air quality, and operational efficiency of public transport fleets. Additionally, policy emphasis will now shift toward charging infrastructure, battery recycling, and long-term ecosystem development.Investments in fast-charging corridors, battery circularity, localized manufacturing of cells, and R&D are expected to play a major role in strengthening the sector. This approach could help build a robust foundation that supports long-term EV growth without relying on financial incentives.However, analysts warn that the withdrawal of subsidies might slow the pace of EV adoption in the short term. A dip in sales, especially in the high-volume two-wheeler segment, could impact India’s target of achieving 30 percent EV penetration by 2030. To stay on track, the market will need innovation-driven solutions that make EVs more affordable and attractive even without incentives.Manufacturers are already exploring new strategies such as modular platforms, improved battery chemistries, and flexible ownership models. Battery leasing, subscription plans, and pay-per-use models may gain traction as companies look to offset higher upfront prices with cost-effective alternatives. Improved battery density, longer ranges, and reduced charging times will also help improve consumer confidence.Despite these challenges, the industry’s long-term outlook remains positive. Electric scooter sales have already crossed the milestone of 50,000 units per month, indicating strong baseline demand. Meanwhile, the electric three-wheeler market continues to flourish because of its inherent financial advantages for commercial users.Ultimately, the removal of subsidies represents a defining moment for India’s EV transition. It signals confidence that the market is ready to progress toward self-reliance, driven by innovation rather than incentives. The next 12 to 18 months will be crucial in determining how effectively manufacturers, consumers, and the ecosystem adapt to this new reality. Whether the growth momentum sustains or temporarily slows will shape the future trajectory of India’s electric mobility mission.