India is proposing to slash the subsidy for electric two-wheelers to 15% of the sale price from 40% at present to spread the incentive to a larger number of vehicles, officials said.
The ministry of heavy industries (MHI) has sent a recommendation in this regard to a high-level inter-ministerial panel that will take a final call on the matter.
Officials said this was being done to increase the proliferation of EV two-wheelers as the government would be able to support more vehicles with the funds available. Further, part of the subsidy allocation for three-wheelers, which is lying unused, will also be used for two-wheelers, they said.
If the proposal goes through, it could lead to a rise in per-unit cost for consumers, though a larger number of buyers would benefit.
The Centre offers financial support to electric vehicle makers under the ₹10,000 crore Faster Adoption and Manufacturing of Electric Vehicles in India (FAME India) incentive scheme.
A senior government official told ET that the total fund allocation for electric two-wheelers under phase II of FAME India will be topped up to ₹3,500 crore using the unspent ₹1,000 crore allocation for electric three-wheelers.
“This will be possible by increasing the allocation and lowering the per unit subsidy,” a senior government official told ET. The recommendations in this regard will be sent to the Programme Implementation & Sanctioning Committee (PISC) of FAME India, which will take a final call on the issue.
Around 5.63 lakh electric two-wheelers have so far benefited from FAME scheme.
“If we continued per unit subsidy at present levels, the allocation for electric two-wheelers will be exhausted in the next two months, despite raising the earmarked amount,” the official said.
The industry is open to the idea of cutting subsidies if it means its extended availability, the official added.
“Once the percentage of subsidy is lowered, we estimate that 10 lakh electric two-wheelers can be supported by FAME India till February 2024,” he added. Officials do not expect the move to impact demand for such vehicles. Around 45,000 units of electric two-wheelers are sold every month in the country.
Source: PTI
