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Govt set to end electric 2W subsidies as FAME III scheme nears conclusion
Industry News- Dec 19,23
The reduction in government subsidies for electric vehicles has led to a decline in the sales of electric two-wheelers, though there are indications of sales stabilising.
According to a report in The Times of India (ToI), the government is set to discontinue subsidies for electric two-wheelers as the allotted provisions are set to expire in the coming weeks. In essence, the FAME III scheme, denoting Faster Adoption and Manufacturing of Electric vehicles, will not be implemented. This initiative has been spearheaded by the heavy industries ministry.
Earlier, the finance ministry voiced apprehensions regarding the scheme's continuation, and now, other government departments have aligned with the perspectives from North Block.
The reduction in government subsidies for electric vehicles has led to a decline in the sales of electric two-wheelers, though there are indications of sales stabilising. Officials argue that the shift towards cleaner-fuel vehicles will occur organically, partly driven by the higher operating costs of fossil-fuel vehicles, as per the ToI report.
The FAME II subsidy, applicable to two, three, and four-wheelers, commenced on April 1, 2019, with a total budgetary support of Rs 10,000 crore for five years. The five-year period concludes on March 31, 2024.
Despite the heavy industry ministry advocating for an extension of the plan, support for this proposition has not materialised from other ministries, as per the ToI report.
The decision to halt the FAME subsidy coincides with the government's contemplation of a new scheme aimed at enticing premium electric car manufacturers, such as Tesla, to establish manufacturing bases in India for both domestic and international markets.
While two-wheeler sales have surged in the southern and western regions of the country, demand remains low in the northern and eastern areas. Electric vehicle manufacturers express optimism about securing an extension and gaining a larger market share over fossil-fuel vehicles.
Source: Business Standard
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