Government mulling over slashing subsidy for 2-wheeler EVs, prices may go up: Report

Government mulling over slashing subsidy for 2-wheeler EVs, prices may go up: Report

To distribute the incentive to more vehicles, officials are proposing to slash the subsidy for electric two-wheelers from 40% to 15%, according to a report by Economic Times.

In this regard, MHI has sent a recommendation to a high-level inter-ministerial panel that will make a final decision.

Moneycontrol could not independently verify this news development.

In order to increase the proliferation of EV two-wheelers, officials said the government would be able to support more vehicles with the funds it has. A portion of the subsidy allocation for three-wheelers, which is lying unused, will also be used for two-wheelers, they said.

This in turn could bring in more models that could get FAME 2 subsidy, but each vehicle would get less amount of subsidy.

An incentive scheme called FAME India (Faster Adoption and Manufacturing of Electric Vehicles in India) offers financial support for electric vehicle makers.

According to a senior government official, the remaining allocation for electric three-wheelers will be used to top up the funding for electric two-wheelers under phase II of FAME India.

“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.

The FAME scheme has benefited around 5.63 lakh two-wheelers so far.

“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, as quoted in the report.

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.