Govt considering termination of FAME subsidy for electric two-wheelers

The government is unlikely to continue subsidy for electric two-wheelers as the provisions for the same come to an end in a few weeks, according to a report published in The Times of India (ToI). In other words, the FAME III scheme will not be rolled out. FAME refers to Faster Adoption and Manufacturing of Electric vehicles, which the heavy industries ministry has implemented.

Earlier, the finance ministry expressed its concerns about the continuation of the scheme, now, other government departments have also agreed to North Block's views.

EV subsidy and its effect on sales

The government has reduced subsidies for electric vehicles, and this has resulted in a decline in the sales of electric two-wheelers. However, the sales appear to be stabilising now. This has resulted in government officials arguing that the transition to clean-fuel vehicles will happen naturally now. This will partly happen due to the high running cost of fossil-fuel vehicles, the ToI report said.

End of FAME II subsidy

FAME II subsidy which is applicable for two, three, and four-wheelers started on April 1, 2019, with a total budgetary support of Rs 10,000 crore, for five years. The five years end on March 31, 2024.

The heavy industry ministry wanted an extension of the plan, however, this has not found support from other ministries, the ToI report said.

The decision to terminate the FAME subsidy comes at a time when the government is considering a new scheme to encourage premium electric car makers such as Tesla to set up their manufacturing bases in India for domestic and international markets.

Two-wheeler sales have surged in the southern and western parts of the country, however, the demand is low in the Northern and Eastern regions. EV manufacturers are hopeful of getting an extension and acquiring a larger market share from fossil-fuel vehicles.