Tata Motors, Ashok Leyland, IPLTech Electric, Propel Industries, and Volvo Eicher will now need to ramp up domestic production of critical components to qualify for government subsidies for their electric trucks. The ministry of heavy industries (MHI) has revised the phased manufacturing programme (PMP) guidelines under the E-DRIVE scheme for N2 and N3 category electric trucks, tightening localisation norms to phase out imports of essential systems starting September.
Under the updated guidelines, critical control systems such as Battery Management Systems (BMS), DC–DC converters, and Vehicle Control Units (VCUs) must be manufactured in India at the component level—covering PCB assembly, semiconductor integration, wiring, enclosure fitment, and software integration.
This move is designed to strengthen the country’s domestic production capabilities, reduce import dependence, and foster a robust local supply chain for the fast-growing commercial EV sector.
August Deadline
Until now, manufacturers could claim subsidies under the ₹500-crore allocation for electric trucks within the broader ₹10,900-crore PM E-Drive scheme even if they imported these key components. The new regulation, however, sets a clear transition deadline: imports of BMS will be allowed only until 31 August 2026. Post this date, vehicles using imported systems will no longer be eligible for government incentives.
The scheme targets N2 and N3 category electric trucks, as defined under the Central Motor Vehicle Rules (CMVR). N2 trucks include those with a Gross Vehicle Weight (GVW) above 3.5 tonnes and up to 12 tonnes, while N3 trucks cover GVW exceeding 12 tonnes and up to 55 tonnes.
Incentivizing Adoption
To encourage adoption, the incentive amount will vary with the vehicle’s GVW, with a maximum subsidy of ₹9.6 lakh per truck.
These incentives are provided as an upfront reduction in the purchase price and reimbursed to original equipment manufacturers (OEMs) through the PM E-DRIVE portal on a first-come, first-served basis. However, buyers must provide scrap certificates for their old vehicles to avail of the subsidy.
By mandating domestic manufacturing of critical systems, the policy encourages OEMs to invest in local R&D, fabrication, and assembly, potentially generating jobs and fostering technological expertise within India.
Industry experts note that while the move may initially increase production costs, it will create a stronger, more resilient supply chain and position India as a key player in electric commercial vehicles globally. Analysts also expect a gradual increase in local content in electric trucks as companies adjust to the phased deadlines and scale up domestic capabilities.
The government’s strategic push aligns with its broader goal of accelerating electric mobility, reducing oil import dependence, and building a self-reliant manufacturing ecosystem. With the revised PMP framework, Centre aims to support the deployment of approximately 5,600 electric trucks nationwide while setting a benchmark for localisation in the commercial EV segment.