Govt to reduce subsidies on two-wheeler EVs from 40% to 15%, claims report

Indian officials are planning to slash the subsidies for electric two-wheeler vehicles from 40 per cent to 15 per cent, according to a report by Economic Times. In line with this development, the Ministry of Heavy Industries has sent a recommendation to a high-level inter-ministerial panel that will make a final decision.    The government is doing this to increase the proliferation of two-wheeler vehicles as well as support more vehicles with the funds available. Furthermore, part of the subsidy allocation for three-wheelers which is lying unused will also be used for two-wheelers.   If the proposal gets the green signal, it could lead to a rise in per-unit cost for consumers, though a larger number of buyers would benefit.    This comes under the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME India) which is a Rs 10,000 crore incentive scheme rolled out by the government in a bid to provide financial support to electric vehicle makers.   A senior government official told ET that the total fund allocation for electric two-wheelers under phase II of FAME India will be topped up to ₹3,500 crore using the unspent ₹1,000 crore allocation for electric three-wheelers.   "This will be possible by increasing the allocation and lowering the per unit subsidy," the senior government official said. 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.   "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.   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. The officials do not expect this move to impact the demand for vehicles.    Business Today is yet to independently verify this report. The story will be updated with the same. 

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