Government To Enhance Funding For E-Two-Wheelers Under The FAME II Scheme

By Outlook Planet Desk May 18, 2023

During a stakeholder meeting with 24 FAME-II-registered electric two-wheeler OEMs, it was agreed that the demand incentive should be preserved at Rs 10,000 per kWh of battery capacity, with a cap of 15% of the ex-factory price, down from the 40% currently

Government To Enhance Funding For E-Two-Wheelers Under The FAME II Scheme
Around 10 lakh EVs were sold in India overall in 2022. Depositphotos

The Heavy Industries Ministry intends to boost the budget for e-two-wheelers under its flagship FAME-II initiative from the existing level of Rs 2,000 crore while decreasing the subsidy per vehicle. There is currently no proposal to extend FAME-II beyond March 2024 or to introduce FAME-III, the official added on the condition of anonymity.

A stakeholders' meeting with 24 FAME-II-registered electric two-wheeler OEMs 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, with a cap of 15% of the ex-factory price, down from 40% currently.

The official stated that a proposal in this regard will be presented to the Programme Implementation and Steering Committee (PISC), which is an empowered group to implement modifications in the Rs 10,000 crore FAME-II Scheme, soon.

Speaking on the subject, Union Minister of Heavy Industries Mahendra Nath Pandey stated that as demand for e-two-wheelers grows, the government is dedicated to providing the industry with the necessary support to promote sustainable growth and minimise carbon emissions.

According to the minister, the government is working closely with industry players to design laws and incentives to stimulate the adoption of electric vehicles across India.

According to him, the ministry is working hard to align itself with Prime Minister Narendra Modi's pledge to Net Zero by 2047 and is taking strong initiatives to promote sustainable mobility in the country.

"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 stated that the majority of two-wheeler OEMs have stated that the subsidy should be extended even if it is reduced. As a result, an agreement evolved to cut the subsidy to 15% for two-wheelers, extending the plan through February-March.

He reasoned that "eventually the industry has to stand on its own feet," while acknowledging that the fast-growing electric 2-wheeler sales "may slow a little."

The Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME) India initiative began on April 1, 2019, for a three-year period that was extended for another two years through March 31, 2024.

The entire investment for Phase II of the FAME Scheme is Rs 10,000 crore, which would be used to provide incentives to customers (end users or consumers) of electric vehicles in order to stimulate greater adoption, which may be encouraged as a purchase price.

The system is only for public and commercial transportation in the electric three-wheeler (e-3W) and electric four-wheeler (e-4W) segments.

The incentive applies to privately owned registered electric two-wheelers (e-2W).