The Centre already has a rolling plan to subsidise 564,000 electric two-wheelers under the second iteration of the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) programme and is working to expand this by another half a million.
Last quarter, the government increased the subsidy allocation for electric two-wheelers by 75% to Rs 3,500 crore from Rs 2,000 crore provided in the budget following an upward revision in subsidy that quickly depleted the allocation.
“We recently allocated an additional Rs 1,500 crore and will increase the quantum further if required. We will take all measures necessary to support the shift to emobility,” said a senior government official.
Sales of electric two-wheelers nearly tripled to 727,000 units in the last fiscal year. More than 40% of these purchases received incentives under the FAME II scheme in FY23. To date, the government has backed the sales of about 690,000 electric two-wheelers under the scheme.
The subsidy per unit per electric two-wheeler has been reduced to support a larger number of vehicles. Under the reworked programme, electric two-wheelers will get a subsidy of 15% of the ex-factory price, down from 40%.
This will mean more expensive ebikes for end consumers, but manufacturers will get support for higher production.
As per estimates, about 46,000 electric two-wheelers were sold last month, compared with monthly average sales of 60,000 units registered in the last financial year. “There has been some impact on sales last month as dealers pushed inventory ahead of the revision in prices with effect from June 1,” said the official. “Customer awareness about electric vehicles has grown manyfold over the last two years. Sales will be better over the next few months.”This expansion plan comes as the government has decided to take action against half a dozen electric two-wheeler makers who are said to have allegedly submitted false documentation and wrongfully claimed incentives to the tune of Rs 469 crore without meeting localisation conditions.
These companies were barred from submitting claims under FAME II in October last year pending investigation but continued to sell vehicles at incentivised rates to end customers.
The Ministry of Heavy Industries had identified 18 parameters for meeting localisation norms under FAME II.
Investigations have revealed that, of the 26 companies registered under FAME II, seven companies did not comply with the norms and yet submitted documents to claim incentives.