FAME-II Subsidy Amount for Electric Two-Wheelers Can Be Reduced

According to officials from the Ministry of Heavy Industries, there is a consideration to lower the subsidy on each electric two-wheeler under the FAME-II scheme in India.  As a result, the overall amount set allocated for electric two-wheelers under FAME-II, which is now Rs 2,000 crore, may be raised. However, the subsidy amount per scooter might be significantly lowered. According to sources, there is no plan to extend the FAME-II scheme beyond March 2024 or launch a new one named FAME-III. 

Proposed Changes on the Subsidy of Electric Two Wheelers

On Tuesday, May 16, a shareholder meeting was conducted involving 24 electric two-wheeler firms in India that benefit from the FAME-II subsidy. A proposal was put forward to alter the demand incentive structure. According to the deal, the demand incentive would be Rs 10,000 per kWh battery capacity, with a ceiling of 15% of the ex-factory price. This differs from the current arrangement, which gives a subsidy of Rs 15,000 per kWh battery capacity with a ceiling of 40% of the ex-factory price.

The proposed revision will be presented to the Programme Implementation and Steering Committee for further consideration. If approved, it will reduce the subsidy amount per kWh battery capacity and a lower cap on the subsidy percentage based on the ex-factory price.

Government Collaboration with Industry Stakeholders

According to Union Minister of Heavy Industries Mahendra Nath Pandey, the Indian government actively collaborates with industry stakeholders. It wants to develop incentives to encourage the country's further adoption of electric vehicles (EVs). Pandey highlighted that most two-wheeler manufacturers are in favour of continuing the subsidy period at a reduced rate. 

As a result, there is a consensus to reduce the subsidy to 15 per cent for two-wheelers. This adjustment would allow for an extension of the subsidy scheme until February-March 2024. The government's efforts to work closely with industry stakeholders and provide ongoing support reflect their commitment to promoting more and more use of EVs in India.

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