The subsidy for electric two-wheelers is set to end in a few weeks because the government is unwilling to implement the third phase of Faster Adoption and Manufacturing of Electric Vehicles or FAME III, according to the Times of India (ToI) report.
The finance ministry and other branches of the government see no benefit in extending electric vehicle (EV) subsidies, reports add. FAME is a scheme promoted by the Ministry of Heavy Industries in response to domestic producer demand.
The demand for electric two-wheelers decreased when the government reduced the subsidy earlier this year, but it now appears to be stabilising. As a result, government officials have argued that the switch to cleaner fuels will happen naturally because it makes economic sense economically to operate them even though they have higher initial costs, reports state.
The government hopes that approximately 10 lakh two-wheelers will receive the subsidy by the time FAME II, which is available to two-, three- and four-wheelers used for public transportation, ends in a few weeks. This is because funds were reallocated in response to demand from local players. Reportedly, a total of Rs 10,000 crore was allocated to the scheme.
Meanwhile, the heavy industries ministry pursued a more ambitious plan, which has yet to gain traction. The refusal to have a third phase comes at a time when the government is considering a new scheme to encourage high-end electric car makers such as Tesla and others to manufacture in India for both domestic as well as export markets.
The government is presently debating the plan, which might resemble a phased manufacturing plan or an incentive system based on production. In addition, a decision to reject any further support may have been prompted by some of the companies’ FAME irregularities.
The demand for electric two-wheelers has increased in the south and west of the country, but it is still low in the north and east. The makers of these companies are hoping that a new lease on life will enable these vehicles to have a larger pan-India footprint at a time when significant resources are being allocated to building charging infrastructure and public awareness, as per reports.
With a Rs 75 crore budget, the central government launched the FAME subsidy scheme in April 2015 in an effort to increase the sales of electric vehicles. In order to lower the cost of ownership for prospective car buyers, the programme involved crediting dealers of electric vehicles (EVs) with cash subsidies.
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