FAME-II subsidy on EVs cut to Rs 10,000/KWh, max 15% of ex-factory price

Move comes as outlay for E2Ws was about to get exhausted months before scheme's Mar 2024 deadline. Govt has already disbursed subsidies to 80% of targeted one million E2Ws under the scheme

Nitin Kumar New Delhi
Electric Two-wheelers

Electric Two-wheelers

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The Centre has slashed the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME-II) subsidy of electric two-wheeler to Rs 10,000 per Kwh from the existing Rs 15,000 per Kwh. The existing maximum subsidy cap of 40 per cent of the ex-factory price of the vehicle has also been pruned to 15 per cent, senior government officials said.
The move comes as the outlay for the E2W was about to get exhausted months before the scheme's March 2024 deadline. The government has already disbursed subsidies to around 80 per cent of the targeted one million E2Ws the scheme.

Union Minister of Heavy Industries, Mahendra Nath Pandey called the move a positive step towards sustainable transportation solutions in India.
“As the demand for E2W continues to grow, the government is committed to providing the necessary support to the industry to ensure sustainable growth and reduce carbon emissions. The consensus reached during the stakeholder consultation signals a positive step towards sustainable transportation solutions in India,” Pandey said.

According to data from the Ministry of Heavy Industries, 792,529 vehicles have been sold under the scheme till February 15, 2023. The ministry took the decision after having consultations with the industry.
“The manufacturers present at the consultation expressed their concerns about this subsidy being nearly utilised and proposed that the scheme outlay of Rs 2,000 crore may be enhanced while correspondingly reducing the subsidy per vehicle,” officials said.

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The proposed increase in scheme outlay and reduction in subsidy per vehicle will enable longer government support for the e-2W segment.
At present, the subsidy for EV makers ranges between Rs 17,000 and Rs 66,000 per electric two-wheeler. After the new notification, the subsidy for each E2W will come down to Rs 15,000-20,000 per electric vehicle.

When launched, FAME II had a provisioning of Rs 10,000 per kWh, however, it was increased to the existing Rs 15,000 per Kwh as there was very low demand for electric two-wheelers then.
The government aims to support more vehicle models and use the subsidy till the end of this financial year. “As the E2W demand has taken momentum in the market, reducing the subsidy will save money and prepare consumers and manufacturers to adjust to the non-subsidised future,” said a source privy to the government’s decision.

E2Ws constituted more than 60 per cent of the overall over one million EVs sold in FY23.
Since the launch of FAME-II in April 2019, around 975,000 E2Ws were sold till March 4, 2023. Of this, around 65 per cent vehicles were sold in the current financial year. The scheme is implemented for five years with a total budgetary support of Rs 10,000 crore.

The government had nearly doubled the allocation for FAME-II in the Budget for the next fiscal year to Rs 5,172 crore. Under FAME-II, the Centre has so far spent Rs 3,889.94 crore.
FAME-II primarily focuses on supporting the electrification of public and shared transportation.

And, apart from E2Ws, it also aims to support through demand incentive 7,090 buses, half a million three-wheelers and 55,000 passenger cars. 


Govt to issue notices to more companies

The government will issue notices to more companies that have been found violating localisation norms under the FAME-II scheme, seeking to debar them and recover incentives claimed by them since FY 2019-20, an official said on Wednesday. Also, the Heavy Industries Ministry will resume disbursal of subsidies under the scheme shortly as reports of most of the firms under the ambit of the audits being conducted by the vehicle testing and validation agencies have been received, the official said. The government recently sent notices to Okinawa Autotech and Hero Electric for debarment from the FAME-II Scheme.

First Published: May 17 2023 | 9:22 PM IST

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