The subsidy reduction is part of the government’s second phase of the Faster Adoption of Manufacturing of Electric Vehicles in India (FAME) scheme
Starting from 1 June, electric scooters are set to become more expensive as the government subsidy provided to electric two-wheeler manufacturers will be reduced. The subsidy reduction is part of the government’s second phase of the Faster Adoption of Manufacturing of Electric Vehicles in India (FAME) scheme.
The Ministry of Heavy Industries issued a notification stating that the subsidy under FAME II will be decreased from Rs 15,000 per kWh to Rs 10,000 per kWh. Additionally, the maximum subsidy offered under the scheme will be capped at 15 per cent of the ex-factory pricing, a significant reduction from the previous 40 per cent subsidy.
The decision to reduce the subsidy was made following a meeting between government representatives and 24 electric two-wheeler manufacturers earlier this month, reported PTI.
The FAME II scheme, according to the government, aims to incentivize the purchase of electric vehicles and promote their wider adoption, particularly in public and commercial transport sectors such as electric three-wheelers (e-3W), electric four-wheelers (e-4W), and electric buses.
The Society of Manufacturers of Electric Vehicles (SMEV) strongly criticised the government’s decision, stating that the sudden reduction in subsidies could lead to a significant decline in electric vehicle adoption, negatively impacting the entire industry for a substantial period of time, reported NDTV.
Media reports suggest that start-up players in the electric mobility sector welcomed the government’s decision, seeing it as an opportunity for the electric vehicle industry to become self-reliant.
The FAME II scheme was initially implemented on 1 April, 2019, and was extended for an additional two years in June 2021, extending the subsidy scheme until 31 March, 2024. However, a PTI report suggests that the government does not intend to further extend the subsidy beyond March 2024 or introduce a third phase of the FAME scheme.