The Ministry of Heavy Industries has unveiled ambitious plans to bolster the FAME-II subsidy outlay for the electric two-wheeler segment by a staggering Rs 1,500-2,000 crore. This move comes in response to the resurgence in demand for electric two-wheelers following a brief disruption due to subsidy adjustments several months ago. As sales of electric scooters have surged, the existing Rs 5,124 crore subsidy allocation is rapidly depleting, prompting this financial injection to ensure the scheme’s viability until March 2024.
The proposal is currently undergoing discussions with key stakeholders, including the Finance Ministry, Niti Aayog, and the Ministry of Heavy Industries as the nodal ministry. Electric two-wheelers have witnessed substantial growth, with sales approaching 6 lakh units in the first eight and a half months of 2023, contributing to the overall milestone of over 1 million electric vehicle sales.
While this growth is promising, it has put immense pressure on the FAME-II subsidy fund, which was initially budgeted at Rs 10,000 crore for a three-year term starting in April 2019. The recent adjustments reduced subsidies from Rs 15,000 per kWh to Rs 10,000 per kWh in June 2023. Additionally, the maximum subsidy cap was reduced from 40 percent to 15 percent for vehicles priced up to Rs 1,50,000.
With an influx of more affordable electric two-wheelers expected in the upcoming festive season, the government anticipates accelerated adoption and increased demand. Union Minister of Heavy Industries Mahendra Nath Pandey reaffirmed the government’s commitment to sustainable transportation solutions and reducing carbon emissions through robust support for electric two-wheelers. This substantial subsidy boost aims to further catalyze India’s transition to electric mobility.