Electric two-wheeler manufacturers and consumers are taking advantage of the subsidy being given under the FAME-II scheme. However, the gains may soon diminish. After this, making electric scooters became a bit expensive. The Ministry of Heavy Industries is considering reducing the subsidy on electric scooters. The total amount earmarked for electric two-wheelers will be increased by Rs 2,000 crore. The move will help a lot more buyers enjoy the benefits, but to a limited extent. As of now, there is no confirmation from the governing bodies regarding the introduction of the new FAME-III policy or the extension of the existing FAME-II, which is effective till March 2024.
In a PTI report, it was said that a stakeholders’ meeting with 24 electric two-wheeler OEMs registered under FAME-II was convened on Tuesday and the consultations reached a consensus that the demand incentive should be given at Rs 10,000 per kWh of battery capacity can be kept on. Currently, with a cap of 15 per cent from 40 per cent of the ex-factory price, the official said.
The official said a proposal in this regard will be placed before the Program Implementation and Steering Committee (PISC), an empowered panel to make changes in the Rs 10,000-crore FAME-II scheme.
“We had called a meeting of 24 registered OEMs of electric two-wheelers on Tuesday. It was decided that we will transfer unutilized subsidy of Rs 1,500 crore from three-wheelers and four-wheelers to two-wheelers, but it was found that the existing distribution rate (40 pc cap at ex-factory price), the scheme will be rolled out in two months,” said an official.
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He shared that most of the two-wheeler OEMs expressed that the subsidy should continue for a longer period, even if it is reduced. Hence, a consensus was reached to reduce the subsidy for two-wheelers to 15 per cent, which would stretch the scheme to February-March.
He argued that “eventually the industry will have to stand on its feet” while admitting that sales of electric two-wheelers which were growing at a brisk pace “may come down a bit”.
The Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME) India scheme was launched on April 1, 2019, for a period of three years, which was further extended for a further period of two years till March 31, 2024.
The total outlay for FAME scheme phase II is Rs 10,000 crore to provide incentives for wider adoption of electric vehicles to buyers (end users or consumers), which can be incentivized as purchase price.