Govt plans to increase outlay for e-2-wheelers under FAME II scheme

The Heavy Industries Ministry is planning to increase the outlay for e-two-wheelers from the current level of Rs 2,000 crore under its flagship FAME-II scheme and reduce the subsidy per vehicle.

There is no proposal at present for an extension of FAME-II beyond March 2024 or introduction of FAME-III, the official said on the condition of anonymity.

A stakeholders' meeting with 24 electric two-wheeler OEMs registered under FAME-II was called on Tuesday and the consultation reached a consensus that the demand incentive may be kept at Rs 10,000 per kWh of battery capacity, along with a cap of 15 per cent of the ex-factory price from 40 per cent at present, the official said.

A proposal in this regard will be placed before the Programme Implementation and Steering Committee (PISC), which is an empowered panel to effect changes in the Rs 10,000 crore FAME-II Scheme shortly, the official added.

Read | Sales of electric two-wheelers suffer dent in April

Speaking on the issue, Union Minister of Heavy Industries Mahendra Nath Pandey said that as the demand for e-two-wheelers continues to grow, the government is committed to providing the necessary support to the industry to ensure sustainable growth and reduce carbon emissions.

The government is working closely with industry stakeholders to develop policies and incentives that will encourage the adoption of electric vehicles across India, the minister added.

The ministry is striving to align itself with Prime Minister Narendra Modi's commitment to Net Zero by 2047 and is taking proactive steps to promote sustainable transportation in the country, he said.

"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 fuels.

"This move will not only benefit the environment but also contribute to building a stronger and more resilient economy," the minister said.

"We had called a meeting of 24 registered OEMS of electric two-wheelers on Tuesday. It was decided that we will transfer the unutilised subsidies to the tune of Rs 1,500 crore from 3 Wheelers and 4 Wheelers to 2 Wheelers but it was found that at the current rate of disbursal (40 pc cap on ex-factory price), the scheme will end in two months," the official said.

He shared that most two-wheeler OEMs expressed that the subsidy should continue for a longer period even if it is slashed. Therefore, a consensus emerged to reduce the subsidy to 15 pc for two-wheelers, which will stretch the scheme till February-March.

He reasoned that "eventually the industry has to stand on its own feet" while admitting that the electric 2-wheeler sales which were growing at a high pace "may come down a little".

The Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME) India scheme commenced on April 1, 2019, for a period of three years, which was further extended for a period of two years up to March 31, 2024.

The total outlay for FAME Scheme Phase II is Rs 10,000 crore to provide incentives to buyers (end users or consumers) of electric vehicles to enable wider adoption, which may be encouraged as a purchase price.

The scheme is exclusively for public and commercial transport in the segments of electric three-wheelers (e-3W), electric four-wheelers (e-4W) and electric buses. The benefit of the incentive is available to privately owned registered electric two-wheelers (e-2W).