FAME-2 subsidy cut will reduce EV buyers, SMEV expresses concern


FAME-2 Subsidy Cut Impact On EV Buyers: SMEV, the body of the electric vehicle industry, has said that a sudden reduction in subsidy for electric two-wheelers can cause huge losses. The body said that this could lead to a big drop in EV adoption and affect the entire industry in the long run. However, on the other hand startup companies in the electric mobility sector have welcomed the government’s decision saying that it is time for the EV industry to stand on its own.

The government has reduced the subsidy given under the FAME-2 (Faster Manufacturing and Faster Adoption of Electric Vehicles in India) scheme applicable to electric two-wheelers. This decision will be applicable to electric two-wheelers registered on or after June 1, 2023. The Ministry of Heavy Industry has notified these changes. The demand incentive for electric two-wheelers will be Rs 10,000 per kilowatt hour.

EV: Electric two-wheelers to become costlier from June, FAME-2 subsidy cut

Reacting to the changes, Sohinder Gill, director general of the Society of Manufacturers of Electric Vehicles (SMEV), said, “The sudden reduction in subsidy could lead to a big drop in EV adoption, which would have long-term ramifications for the entire industry.”

He said that the ground reality is that the Indian market remains price sensitive. Most petrol two-wheelers cost less than Rs 1 lakh, and hence the chances of spending more than Rs 1.5 lakh on an electric vehicle are slim.

FAME-II: Some companies were doing ‘games’ to get subsidy, now the government has taken a tough decision

Gill, however, said that the Ministry of Heavy Industries had already indicated to reduce the subsidy a few months back. On the other hand, Siddharth Kabra, co-founder and CEO of Voltup, welcomed the reduction in FAME subsidy and said that now is the time for the industry to stand on its feet. He also called upon the industry and the government to work towards formulating a coherent infrastructure development policy.

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