Indian electric two-wheelers cost may rise as the Ministry of Heavy Industries has been considering increasing the outlay for EV two-wheelers and reducing the subsidy per vehicle.
The ministry plans to raise the outlay by 75 percent from the current Rs 2,000 crore under the FAME-II scheme.
There are no plans to extend the FAME-II scheme beyond March 2024 or introduce FAME-III, according to a government official.
A stakeholders’ meeting was recently held with 24 electric two-wheeler original equipment manufacturers (OEMs) registered under FAME-II.
It was decided that the demand incentive would be maintained at Rs 10,000 per kWh of battery capacity, but the cap would be reduced from the current 40 percent of the ex-factory price to 15 percent.
This decision was made to ensure the scheme’s longevity, as the current rate of disbursal would deplete the subsidies within two months.
The proposal for these changes will be presented to the Programme Implementation and Steering Committee (PISC), an empowered panel responsible for implementing changes in the Rs 10,000 crore FAME-II scheme.
The official stated that most two-wheeler OEMs expressed the desire for the subsidy to continue for a longer period, even if it is reduced. Thus, a consensus was reached to reduce the subsidy to 15 percent for two-wheelers, allowing the scheme to last until February-March.
The official acknowledged that the industry eventually needs to become self-sustainable and admitted that the growth rate of electric two-wheeler sales, which has been high, may decline slightly.
Union Minister of Heavy Industries Mahendra Nath Pandey emphasized the government’s commitment to supporting the industry in achieving sustainable growth and reducing carbon emissions, as the demand for electric two-wheelers continues to rise. He believes that this move will benefit both the environment and contribute to a stronger and more resilient economy.
The FAME India scheme, aimed at faster adoption and manufacturing of electric and hybrid vehicles, began on April 1, 2019, for a three-year period and was later extended for an additional two years until March 31, 2024.
The total outlay for FAME Phase II is Rs 10,000 crore, providing incentives to buyers of electric vehicles and encouraging their wider adoption.
The scheme primarily focuses on public and commercial electric vehicles, including electric three-wheelers, electric four-wheelers, and electric buses. However, privately owned registered electric two-wheelers are also eligible for incentives.