Two-Wheeler EV Sales Dip As Govt Slashes FAME-II Subsidy

Parliamentary Standing Committee Recommends Incentives Under FAME Scheme

Govt slashed the FAME-II subsidy for two-wheelers EVs last month. Photo by-Sentavio/Freepik

The slashing of subsidies for electric two-wheelers by the Ministry of Heavy Industries last month has now shown results in its sales in the market. The ministry gives subsidies under the Faster Adoption of Manufacturing of Electric Vehicles (FAME)-II scheme. This hand-holding support from the government apparently helped many consumers to shun polluting vehicles and shift to electric mobility.

However, the last month’s slashing of the subsidy support seems to have not gone well with the prospective buyers of electric two-wheelers in India. According to the data from the Vahan portal of the Ministry of Road Transport, the sales witnessed around a 60 percent cut compared to the sales the segment witnessed in May this year.

According to the data, in May, the total electric two-wheeler sales accounted for 1,05,338. On the other hand, the total sales of the same in June this year stood at only 45,734, which was close to a 57 percent dip in the total sales. It hints at the likely link of the preference of two-wheeler EV buyers towards subsidized EV units.

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Last month, the ministry reduced the subsidies for electric two-wheelers under FAME-II. It included reducing the demand incentive from Rs 15,000 per KwH to Rs 10,000 KwH. It also ordered slashing cap on incentives from 40 percent to 15 percent.

The Union cabinet in 2019 approved the proposal for implementing a scheme titled ‘Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II)’ for the promotion of Electric Mobility in the country. The scheme allocated Rs 10,000 crores to boost electric mobility in India. This scheme is the expanded version of the present scheme titled ‘FAME India1, which was launched on 1st April 2015, with a total outlay of Rs. 895 crores.

The scheme envisaged helping the Original Equipment Manufacturers (OEMs) and the consumers at large to increase the deployment of EVs in the country. Last month, it reduced the subsidy for two-wheelers apparently to allocate more funds for electric buses and other segments of EVs in the country.

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