India alters electric two-wheeler subsidies

Image: Ola Electric

The Indian government has proposed to increase the overall funding for subsidies for electric two-wheelers but cut the subsidy available for each vehicle. Instead of the previous maximum of 40 per cent of the purchase price, only a maximum of 15 per cent would be covered under the FAME II scheme.

Although the individual amount of subsidies available for each vehicle is to be significantly reduced, the overall budget is to be increased from INR 2,000 Cr to INR 3,500 Cr (around 3.5 billion euros). The proposed increase in overall subsidies for two-wheelers is to come from reallocating unutilised subsidies earmarked for three-and four-wheeled electric vehicles.

The change will come into force in a few days, on 1 June. The second phase of the national eMobility subsidy programme FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) runs until 31 May 2024.

According to INC42, several two-wheeler electric vehicle manufacturers are currently under investigation for the misappropriation of FAME II subsidies. The uncertainty around the FAME II scheme and the ongoing investigation into the misuse of subsidies has negatively affected registrations of electric two-wheelers, with a drop of 23 per cent in registrations from March to April.

The cut in the subsidy amount afforded to each vehicle was decided during a meeting with stakeholders of 24 OEMs of electric two-wheelers registered under the scheme. According to Mint, a government official who wished to remain anonymous said that the OEMs at the meeting expressed the wish that the subsidy scheme continues even if it is reduced. This prompted participants at the meeting to agree that the subsidy amount per vehicle should go down to make sure funds were available till the end of the scheme in February – March. As yet, the Indian government has given no indication as to whether the subsidy scheme will be extended beyond March 2024.

Union Minister of Heavy Industries Mahendra Nath Pandey said the changes were necessary because of the increased demand for electric two-wheelers. “The consensus reached during the stakeholder consultation signals a positive step towards sustainable transportation solutions in India. With continued efforts and collaboration between the government and industry, India can become a global leader in sustainable transportation and reduce its dependence on fossil fuel,” he explained.,,


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