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Govt cuts subsidy on electric 2-wheelers

Facts for Prelims (FFP)

Source: ET

 Context: The government has decided to reduce the subsidy provided under the FAME-II scheme for electric two-wheelers starting in June.


Ministry of Heavy Industries notified changes:

  • The subsidy for electric two-wheelers would be reduced to ₹10,000 per kilowatt hour (kWh) effective 1 June 2023 from ₹15,000 currently.
  • The cap on incentives for such vehicles has been lowered to 15% of the ex-factory price of vehicles from the earlier 40%.
  • But the total amount allocated toward providing incentives for these vehicles will be raised from the current ₹2,000 crores.


The rationale for changes:

The intention behind lowering the subsidy and increasing the funds for electric two-wheelers is to support more consumers through the FAME scheme with the available funds.


About the FAME Scheme:

BackgroundFAME India is part of the National Electric Mobility Mission Plan and aims to encourage electric vehicles through subsidies. It covers all vehicle segments.
Phases of the schemePhase I: Started in 2015 and completed on March 31, 2019. Phase II: Started in April 2019 and completed on March 31, 2022.
Technologies coveredHybrid & Electric technologies, including Mild Hybrid, Strong Hybrid, Plug-in Hybrid & Battery Electric Vehicles.
Monitoring AuthorityDepartment of Heavy Industries, Ministry of Heavy Industries and Public Enterprises.
Four focus areasTechnology development, Demand Creation, Pilot Projects, Charging Infrastructure.
ObjectivesEncourage faster adoption of electric and hybrid vehicles through upfront incentives. Establish necessary charging infrastructure.
Salient features of Phase IIEmphasis on electrification of public transportation, including shared transport. Incentives are mainly applicable to vehicles used for public transport or registered for commercial purposes. Benefits extended to vehicles with advanced batteries like Lithium-Ion.