FAME II Subsidy for Electric Two-Wheelers Slashed to Rs 10,000 from Rs 15,000
- ByStartupStory | May 22, 2023
According to an official notification by the Ministry of Heavy Industries, the Indian government has recently announced a reduction in the FAME II subsidy for electric two-wheelers. The subsidy has been decreased from Rs 15,000 per kWh to Rs 10,000 per kWh. Additionally, the previous maximum subsidy cap, which accounted for 40% of the vehicle’s ex-factory price, has now been lowered to 15%.
According to a knowledgeable source familiar with the government’s decision, the Ministry of Heavy Industries has submitted a recommendation to an inter-ministerial panel to reduce the current electric vehicle (EV) subsidy on two-wheelers. The rationale behind this proposal is to enable regulators to extend benefits to a larger number of buyers. However, a consequence of this action is that electric two-wheelers might experience an increase in price.
According to a report, three reliable sources stated that the industry had foreseen a gradual decrease in subsidies for two-wheelers and personal electric vehicles (EVs). The upcoming iteration of the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme is expected to prioritize charging infrastructure and a shift away from consumer subsidies. Launched by the central government in 2015, the FAME scheme aimed to accelerate the adoption of EVs in India. FAME II, which is an extension of the original scheme, was implemented in 2019.
“With the reduction of subsidy to 15%, it is clear that the EV ecosystem in India is growing rapidly, and there is demand,” said Siddharth Kabra, Co-founder and CEO of VoltUp.
“While the immediate impact of subsidy reduction will be a rise in price and lower sales, the government in a way is allowing the industry to become independent,” he added.
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