Electric two wheelers may get costlier as government looks to revamp the FAME-II scheme

• The government is reportedly looking to revamp the FAME-II scheme for electric two wheelers.
• The government is expected to slash the cap of subsidy on electric two wheelers from the existing 40% of the ex-factory price to 15%.
• The move is aimed at providing the subsidy to a larger number of vehicles.

The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme was introduced by the government to promote the adoption of electric vehicles in the country by subsidising the cost of vehicles.

According to a report by Economic Times, the Ministry of Heavy Industries has recommended the government to slash the cap of subsidy on electric two wheelers from the present 40% to 15% of the ex-factory price. This, the officials said, will help to spread the incentive to a larger number of vehicles.

The proposal will be sent to the Programme Implementation & Sanctioning Committee (PISC) of FAME India which will take a final call on the implementation.

Move aimed to provide subsidy to more vehicles

According to officials familiar with the matter, the move is aimed at increasing the proliferation of electric two wheelers in the market. This will allow the government to provide subsidies to more vehicles with the funds available under the scheme.

In addition to this, part of the subsidy allocation for three-wheelers which hasn’t been used will also be utilised for two-wheelers.

“If we continue 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,” an official told ET.

With the addition of ₹1,000 crore of unutilized funds from three-wheelers, the allocation for electric two-wheelers under the FAME-II scheme will be increased to ₹3,500 crore.

Once the percentage of subsidy is lowered, we estimate that 10 lakh electric two two-wheelers can be supported by FAME India till February 2024," the official added.

Electric two wheelers may get costlier

While electric two-wheeler companies such as Ola, TVS and Ather have not commented on the proposed changes, this is expected to impact the per unit cost of scooters and may result in electric two wheelers becoming costlier.

Business Insider India has reached out to Ola Electric, TVS Motor and Ather to understand the impact of the proposed changes and is yet to hear back from the companies. We will update the story once the companies respond.

A petition sent by the Society of Manufacturers of Electric Vehicles (SMEV), an association of Indian EV manufacturers, had revealed that ₹1,200 crore worth of subsidies have been withheld by the government. This was reportedly done due to alleged violations of the localisation norms and fraudulent claiming of subsidies.

Soon after this, companies like Ola and Ather announced that they will refund the cost of chargers to buyers.

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