EV Industry Reacts To FAME II Subsidy Reduction On Electric Two-Wheelers from June Sources stated that the development comes with a motive that the reduction will help regulators offer benefits to more buyers, and also expecting the electric two-wheelers become more expensive

By Teena Jose

Opinions expressed by Entrepreneur contributors are their own.

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The recent announcement by ministry of heavy industries regarding the reduction in FAME II subsidy for electric two-wheelers to INR 10,000 per kWh from INR 15,000 along with cutting the cap on the maximum subsidy on vehicle's ex-factory price to 15% from 40% has seen EV industry react. As a result of reduction in subsidy, the electric vehicles are set to get expensive by about INR 25,000 to INR 30,000 from June 1.

There have been different reactions to this news development from the EV industry. MS Chugh, founder and chairman, Aponyx Electric Vehicles, said, "We commend the government's commitment to cut E-2 wheeler subsidies under the FAME 2 plan. While anticipated subsidy reductions may affect costs, however, we are confident that this will allow 2-wheeler EV to employ new technology and provide consumers a variety of creative models. Furthermore, looking at the pace of growth of the industry and the emergence of new players clearly indicates that this will not be a big issue. As we all know, EVs are a great alternative to gasoline vehicles. Subsidies or not, the EV industry will definitely boom in the future."

Ashutosh Verma, founder, Exalta India stated, "While we see the need for regulatory changes and cost-cutting measures, it is critical to establish a balance that supports the sustained affordability of electric two-wheelers. We encourage the government to carefully assess the impact of eliminating subsidies and to consider other measures to enhance EV affordability and accessibility. The industry is concerned about the possibility of reducing incentives for two-wheeler EVs. The current subsidy system has been critical in making electric vehicles more cheap and boosting customer uptake."

Validating the government's effort in promoting electric mobility and implementing the FAME II subsidy scheme, Nehal Gupta, director, AMU Leasing added, "These incentives make electric two-wheelers affordable and attractive to consumers, fostering a transition from conventional vehicles. We urge the government to reconsider this decision and continue supporting the electric mobility sector. Sustained financial incentives are crucial for creating a sustainable and eco-friendly transportation ecosystem in line with the government's vision for a greener future. By ensuring the continuation of subsidies, we can drive demand, spur technological advancements, and create a thriving market for electric vehicles. Together, let's forge ahead towards a greener, cleaner, and brighter future for our nation."

Kapil Shelke, Founder & CEO, TORK Motors said, "The revised FAME-II subsidy slab by the government is a step in the direction taken by several nations as markets for EVs start to begin their maturing phase. While penetration of EVs are still much below the desired 10%, it will also allow for the manufacturing ecosystem to gear up for the new reality. For us at TORK Motors, we have focussed our efforts on providing our customers with a great product and ecosystem experience, to provide high levels of customer delight and satisfaction and will continue to stay on this path, irrespective of subsidy slab changes."

Sushant Kumar, founder/managing director, AMO Mobility, has said that, "We welcome the government's decision of subsidy revision under the FAME-II scheme for electric two-wheelers. It is crucial to acknowledge that the industry's progress should not solely depend on subsidies. While recognizing this policy adjustment, we advocate for the implementation of supplementary measures within FAME 3. These measures should aim to enhance incentives and foster wider acceptance of electric vehicles, ensuring sustainable growth and promoting a cleaner and greener transportation ecosystem. The policies need time to be absorbed properly by the change makers, EV manufacturers further have their distribution network, dealership network, sub dealership network and a whole chain of vendors that need to adopt the changes. OEMs like us would only request the government to provide ample time to implement and adopt the policies, and measure the changes. Reiterating that the policy is welcome but needs time to be adopted properly."

Jayapradeep V, chief business officer, Raptee Motors, opined on this development that, "Although subsidies in the initial phase would help accelerate the adoption, it is essential that every business finds its own way to provide value to its clients, which could help significantly in the long run. In my view, no industry can endure for an extended period of time by relying just on subsidies. However, Higher magnitude abrupt reductions could be detrimental to the existing level of performance, which is just settling in. In addition, such a price hike would be challenging to explain from a consumer point of view, and it would take a great deal of time for the EV market to absorb the impact. Nonetheless, despite the fact that it may look like a less substantial incentive, we endorse the government's current strategy of extending the Fame 2 support to as many vehicles as possible from the funds available."

The committee, set up by the ministry, has also recommended certain changes to improve the viability of the development of public charging infrastructure for electric vehicles.

The recommendations reportedly include supporting the upstream infrastructure such as distribution transformer, LT & HT cables, AC distribution boxes, circuit breakers/isolators, protection equipment, tubular or PCC mounting structures, fencing, and civil work.

Both the capping of on-demand incentive and the incentive per kWh of battery size were lowered from current levels, with the amendments coming into effect from June 1. This amendment comes in the background of the government's decision to reallocate an additional INR 1,500 crore under the FAME II scheme to the electric two-wheeler segment.

Launched in 2015 by the central government, the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme was aimed at catalysing the adoption of EVs in the country.

Teena Jose

News Desk Reporter with Entrepreneur India

Teena is a post graduate in financial journalism. She has an avid interest in content creation, digital media and fashion.

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