FAME 2 Subsidy For Electric Two-wheelers Requested To Be Extended For Five More Years

The Federation of Indian Chambers of Commerce and Industry (FICCI) has advocated for a five-year continuation of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME 2) scheme. The scheme is all set to end by March 31 2024, but now this proposal has been submitted to the Ministry of Heavy Industries, Government of India, underscoring the significance of maintaining price parity between Electric Vehicles (EVs) and Internal Combustion Engine (ICE) vehicles. In this proposal, FICCI has requested for the continuation of FAME 2 for five more years with a thorough review at the end of three years, to assess its effects once. 

FICCI has warned that the withdrawal of the price incentives will result in a substantial 25 percent price hike for EVs. This, in turn, might hinder the momentum of EV adoption and disrupt whatever little progress has been achieved in the sector. FICCI also pointed out that developed countries like Canada, the United States, and Korea still have purchase incentives on EVs. FICCI has also said that over the next 3-5 years, as the prices for batteries reduce further and the prices of EV components reduce (due to scale effect), demand incentives can then be eventually discontinued. 

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India currently stands at a mere 5 percent EV penetration, making the continuation of FAME crucial to achieving the government's ambitious target of 30 percent EV penetration by 2030. Any sudden discontinuation of FAME could lead not only to a decline in demand growth but also to a setback in investments in the EV sector and the Make In India initiative. We can see that in the time when the government of India decided to suddenly reduce FAME 2 subsidies significantly. It not only had a direct impact on the prices but also on the demand and sales. More about it in our exclusive interview with Tork. 

For any two-wheeler to qualify for the scheme, certain criteria have to be met. The two-wheeler should go 80km on a single charge and should manage to go at least 40kmph. Also, the two-wheelers also need to have a certain degree of localisation for it to qualify for the benefits. For perspective, here’s how much FAME 2 subsidy scooters like the Ather 450X and the TVS iQube get: 

We hope this gives you perspective of how much the FAME 2 subsidy shields customers from EVs’ real prices. So continuing them a bit more, especially when Indians have slowly started to open up to the idea of EVs, would definitely make sense and we hope the Ministry of Heavy Industries takes steps that benefit us. And along with continuing FAME 2 subsidies, the charging infrastructure in India also needs to witness substantial growth. These two go hand in hand for wholehearted EV adoption.