Electric Scooters To Get Expensive? Govt Likely To Reduce Subsidies Under FAME-II

The subsidy offered on electric two-wheelers under the FAME-II policy could soon be slashed, making electric scooters and motorcycles slightly expensive.

Electric two-wheeler manufacturers and consumers are enjoying the benefits of subsidies that are being offered under the FAME-II scheme. The benefits, however, could be soon slashed. Subsequently, making electric scooters a tad bit expensive. The ministry of heavy industries is considering cutting down the subsidy that is being offered on electric scooters. The overall earmarked amount for electric two-wheelers - Rs 2,000 Crore, will be increased. This move will help a lot more buyers enjoy the benefit, but to a rather limited extent. As of now, there’s no confirmation from the governing bodies about the introduction of new FAME-III policy or extension of the outgoing FAME-II, which is in effect until March 2024.

In a PTI report, it was stated that a stakeholders' meeting with 24 electric two-wheeler OEMs registered under FAME-II was called on Tuesday and the consultation reached a consensus that the demand incentive may be kept at Rs 10,000 per kWh of battery capacity, along with a cap of 15 per cent of the ex-factory price from 40 per cent at present, the official said.

A proposal in this regard will be placed before the Programme Implementation and Steering Committee (PISC), which is an empowered panel to effect changes in the Rs 10,000 crore FAME-II Scheme shortly, the official added.

"We had called a meeting of 24 registered OEMS of electric two-wheelers on Tuesday. It was decided that we will transfer the unutilised subsidies to the tune of Rs 1,500 crore from 3 Wheelers and 4 Wheelers to 2 Wheelers but it was found that at the current rate of disbursal (40 pc cap on ex-factory price), the scheme will end in two months," an official said.

He shared that most two-wheeler OEMs expressed that the subsidy should continue for a longer period even if it is slashed. Therefore, a consensus emerged to reduce the subsidy to 15 pc for two-wheelers, which will stretch the scheme till February-March.

He reasoned that "eventually the industry has to stand on its own feet" while admitting that the electric 2-wheeler sales which were growing at a high pace "may come down a little".

The Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME) India scheme commenced on April 1, 2019, for a period of three years, which was further extended for a period of two years up to March 31, 2024.

The total outlay for FAME Scheme Phase II is Rs 10,000 crore to provide incentives to buyers (end users or consumers) of electric vehicles to enable wider adoption, which may be encouraged as a purchase price.