In a noteworthy development, the Indian government is reportedly considering the termination of subsidies for electric two-wheelers under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme. The FAME III initiative, which aims to promote the adoption of electric vehicles, is unlikely to see the light of day as provisions for the subsidy are set to expire in a few weeks, as reported by The Times of India.
Earlier concerns voiced by the finance ministry have gained traction among other government departments, leading to a consensus aligning with the views from North Block.
Impact on Electric Vehicle Sales
The reduction in government subsidies for electric vehicles has been a contributing factor to a temporary decline in sales for electric two-wheelers. However, recent trends indicate a stabilization in sales, prompting officials to argue that the natural transition to clean-fuel vehicles is now underway. This shift is attributed, in part, to the high running cost of fossil-fuel vehicles, creating a more favorable environment for electric alternatives, according to The Times of India.
FAME II Subsidy Conclusion
The FAME II subsidy, applicable to two, three, and four-wheelers, commenced on April 1, 2019, with a total budgetary allocation of Rs 10,000 crore over five years. The subsidy program is scheduled to conclude on March 31, 2024. Despite the heavy industry ministry’s request for an extension, support from other ministries has not materialized, leading to the potential termination of the FAME subsidy.
This decision comes at a pivotal moment, coinciding with the government’s contemplation of a new scheme to incentivize premium electric car manufacturers, including industry giants like 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, there is a notable demand gap in the northern and eastern regions. Electric vehicle manufacturers are hopeful for an extension, aiming to secure a larger market share as they seek to transition consumers away from fossil-fuel vehicles.
