Govt considers now reducing FAME-II subsidies for two-wheelers EV

EV two wheelers

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NEW DELHI, 18 May 2023: FAME-II, the government’s flagship scheme, is expected to receive an increase of 75 percent from the current INR 2000crore.

The Ministry of Heavy Industries is considering increasing the expenditure for EV two-wheelers and lowering the subsidy per vehicle, which will likely result in a dramatic increase in the price of these vehicles.

According to a government official, there are no plans to introduce FAME-III or extend the FAME-II programme through March 2024.

FAME-II scheme

With 24 original equipment manufacturers (OEMs) of electric two-wheelers registered under FAME-II, a stakeholders’ conference was recently held. It was decided that the cap would be lowered from the existing 40 percent of the ex-factory price to 15 percent and that the demand incentive would remain at INR 10,000 per kWh of battery capacity.

Since the current pace of disbursal would exhaust the subsidies in two months, this choice was adopted to ensure the scheme’s survival.

The Programme Implementation and Steering Committee (PISC), a powerful council in charge of implementing improvements to the INR 10,000 crore FAME-II plan, would be given the proposal for these revisions.

According to the official, even if the subsidy is lowered, the majority of two-wheeler OEMs expressed a desire for it to last for a longer time. Thus, a decision was made to cut the two-wheeler subsidy to 15 percent, extending the duration of the programme until February or March.

The official admitted that the industry must eventually become self-sufficient and that the strong growth rate of sales of electric two-wheelers may significantly slow down.

Mahendra Nath Pandey, the Union Minister of Heavy Industries, emphasised the government’s dedication to helping the sector achieve sustainable growth and lower carbon emissions as the market for electric two-wheelers continues to grow. He thinks that by making this change, the economy will become stronger and more robust while also benefiting the environment.

FAME India initiative

The FAME India initiative, which started on 1 April 2019, for a three-year term and was later extended for an additional two years through 31 March 2024, is intended to hasten the adoption and production of electric and hybrid vehicles. A total of INR 10,000 crore would be spent on FAME Phase II, which will offer incentives to buyers of electric vehicles and promote their further use.

FAME II

The programme primarily focuses on electric buses, three-wheelers, and four-wheelers that are used in public and commercial settings. However, incentives are also available for privately owned, registered electric two-wheelers.

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