India's EV story is no longer about whether it should go electric, but the kind of transition it chooses to institutionalise once the subsidy training wheels come off. Subsidies for electric 2-wheelers (e2Ws) under PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme are set to end on March 31. This threatens to expose a widening gap between what the state subsidises - battery size - and what citizens actually value - cost per km, reliability and trustworthy service.

With a ₹10,900 cr outlay, time-bound PM E-DRIVE signals that demand incentives are never meant to be permanent. It forces the EV sector to confront cost reduction, localisation and durable customer experience. The scheme is also anchored in guard rails like certification and periodic validation that recognise an uncomfortable fact: in a mass market with thin margins and rapid entry, consumer protection is not a luxury. It must be the foundation for adoption.

That said, PM E-DRIVE also exposes the next policy problem. The state pays per kWh, while citizens buy per km. A kWh-linked subsidy may be administratively clean, but it's inclined to reward larger battery capacities over engineering efficiency. This, in turn, can lead to increased cell imports, higher import costs and vulnerability to geopolitical supply chain disruptions. This is especially true in cases where 'more range' can be marketed at the cost of mediocre energy consumption. The system risks subsidising weight and inefficiency at scale.

India needs to pivot from output subsidies to performance-linked criteria defined by four strokes:

Efficiency GoI can offer road-tax waivers or priority permits and such for commercial 3-wheelers (e3W) as a reward. For e2W, eligibility should be filtered to protect the mass market. Benefits can be restricted to models with a 3.5-4 kWh battery capacity sufficient for 100 km of daily commute.

It can also introduce a rating system through a Bureau of Energy Efficiency 'star rating' system similar to what's used in consumer appliances. 2-wheelers can be classified into 1- to 5-star rating slabs based on their energy consumption per km (Wh/km), with the most efficient vehicle earning 5 stars. Such a system will push OEMs to compete on aerodynamics as well as motor and vehicle efficiency, rather than relying on the crutch of subsidised batteries.

Reliability PM E-DRIVE lists warranty and after-sales requirements. That's not the same as guaranteeing trust. Future policies should introduce a transparent reliability dashboard, one that includes warranty claims per 1,000 vehicles, repeat failure rates for critical components (battery, motor, controller), and a median time-to-resolution. With this data, surveillance testing will become smarter. Such trust-building exercises will see more accountability while protecting the interest of consumers in a space where first-time buyers are often one bad experience away from writing off the technology.

Policies should not lean heavily towards legacy players or startups. It should raise the floor for everyone, so that innovation is rewarded but fragility is not subsidised.

Finance More often than not, EV loans can be unfavourable in segments that matter the most, like e2W and commercial e3W. Development finance institutions are experimenting with risk-sharing structures. Sidbi's work on partial risk-sharing and on-lending facilities for e2W and e3W loans is a good template as it addresses real lender fears like resale value, battery life uncertainty and fragmented borrower profiles.

Localisation This is where resilience, cost reduction and jobs converge. e2Ws localisation is already embedded through phased manufacturing expectations. PM E-DRIVE's own eligibility assessment includes compliance with GoI's Phased Manufacturing Programme (PMP) as part of the model evaluation process. So, the post-March 31 question isn't whether localisation should exist, but whether India can make it predictable, investable and export-friendly.

This is where PM E-DRIVE must be read alongside industrial schemes that sit outside demand incentives. PLI for auto and auto components carries a budgetary outlay of ₹25,938 cr to strengthen advanced automotive manufacturing. PLI for advanced chemistry cell battery storage carries an outlay of ₹18,100 cr, aimed at building giga-scale battery manufacturing with an emphasis on domestic value addition. Together, these schemes create the supply-side spine that must now outlive demand subsidies, especially for motors, controllers, power electronics, cells, and pack-level safety systems that decide cost per km and reliability.

California's long-running ZEV (zero-emission vehicle) regulation shows how a market can be nudged through manufacturer obligations and credit frameworks. China's dual-credit approach goes further, tightening credit requirements over time to accelerate adoption, but without compromising on efficiency and compliance.

India needn't blindly copy-paste these initiatives. But it should acknowledge that a post-subsidy era must be built on rules, data, finance - and, above all, trust.