The Ministry of Heavy Industries is contemplating a significant increase in the outlay for electric two-wheeler vehicles, which could result in a sharp rise in prices. Under the FAME-II scheme, the ministry plans to raise the current Rs 2,000 crore outlay by 75 percent. However, there are no intentions to extend the FAME-II scheme beyond March 2024 or introduce FAME-III, according to a government official.
A recent stakeholders’ meeting was held, involving 24 electric two-wheeler original equipment manufacturers (OEMs) registered under FAME-II. It was decided that while the demand incentive of Rs 10,000 per kWh of battery capacity would be maintained, the cap would be reduced from the existing 40 percent of the ex-factory price to 15 percent. This adjustment aims to ensure the sustainability of the scheme, as the current rate of subsidy disbursement would deplete the funds within two months.
The proposal outlining these changes will be presented to the Programme Implementation and Steering Committee (PISC), an empowered panel responsible for implementing modifications in the Rs 10,000 crore FAME-II scheme.
The government official noted that most two-wheeler OEMs expressed their desire for the subsidy to continue for a longer period, even if at a reduced rate. As a result, a consensus was reached to decrease the subsidy to 15 percent for two-wheelers, allowing the scheme to remain effective until February-March.
While acknowledging the need for the industry to eventually become self-sustainable, the official recognized that the growth rate of electric two-wheeler sales, which has been significant, may experience a slight decline.
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 surge. He believes that this move will benefit the environment while contributing to a stronger and more resilient economy.
The FAME India scheme, which aims to accelerate the adoption and production 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. With a total outlay of Rs 10,000 crore, FAME Phase II provides incentives to buyers of electric vehicles, aiming to encourage their wider adoption.
While the scheme primarily focuses on public and commercial electric vehicles such as three-wheelers, four-wheelers, and buses, privately owned registered electric two-wheelers are also eligible for incentives.
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