EV makers seek stable subsidy policy in budget, fresh boost to green mobility: Report

Stakeholders in the EV industry continue to advocate for sustained government support to facilitate growth and stability in the sector amidst evolving market dynamics.

In the run-up to Union Budget for 2024-25 later this month, expectations are running high over the unveiling of the third edition of the government scheme to promote adoption of electric vehicles (EV).

Sections of EV manufacturers are advocating for a subsidy policy with a clear and extended timeline, unlike previous abrupt cuts, reported The Economic Times.

Amitabh Saran, CEO of electric three-wheeler manufacturer Altigreen, stresses on the need for stability. "New changes are too sudden, especially for the automobile industry with its long lead times. We would want the new subsidy regime to last for at least two to three years to truly benefit the industry," he was quoted as saying in the ET report.

The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme was initially launched in 2015 to incentivise the adoption of electric and hybrid vehicles by providing subsidies to EV manufacturers, thereby reducing product prices. The second edition, FAME-II, introduced in 2019, was in effect until its abrupt termination in March 2024. Following its discontinuation, there has been a notable decline in EV sales, as reported by the Federation of Automobile Dealers Associations.

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As stakeholders await the Union Budget announcement, the EV industry remains hopeful of a sustainable and supportive policy framework to drive growth and adoption in the sector, according to ET.

Saran also emphasised that subsidies are still crucial for the survival of India's electric vehicle (EV) sector. "Today, approximately 21 percent of cargo vehicles and 9-10 percent of passenger vehicles are electric. The market will need another two to three years to reach a stage where it can sustain itself without subsidies," he said in a conversation with ET.

In March, the government introduced the Electric Mobility Promotion Scheme (EMPS) aimed at promoting electric two-wheelers and three-wheelers, as well as bolstering the EV manufacturing ecosystem in the country. However, the subsidies provided under the new scheme were effectively halved compared to FAME-II.

Stakeholders in the EV industry continue to advocate for sustained government support to facilitate growth and stability in the sector amidst evolving market dynamics.

Also read: Modi 3.0 may speed up EV growth with Rs 10,000-cr FAME-III scheme in budget: Report