The electric two-wheelers are set to get costlier from June 1, as the Government of India has revised the subsidy to Rs 10,000 per kilowatt per hour as against Rs 15,000 per kilowatt per hour, and the cap for incentive has been brought down to 15% of the ex-factory price as against 40% benefit extended earlier.
The FAME scheme had come into existence from the start of FY20. A sum of Rs 10,000 crore under FAME or Faster Adoption and Manufacturing of Electric Vehicles was extended for a period of three years.
The scheme which was to end in FY22, was extended by another couple of years to FY24 to ensure the adoption gathers pace. The move had already started helping the industry. The market had crossed the 1 million mark for the first time in the last financial year.
In a circular issued on Sunday, a gazette notification issued by the nodal ministry – the Ministry of Heavy Industries stated, in a partial modification of its notification issued vide S.O.2258(E) dated June, 11, 2021 in respect of Scheme for Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II), these amendments were made with effect from June 1, 2023.
Experts say this move may put vehicle makers who have invested under the Government’s Production Linked Incentive Scheme in a better competitive position versus others who did not apply for this.
Raghunandhan N L, equity analyst at Nuvama Institutional Equities, told Autocar Professional this will impact the pace of EV penetration and will increase the vehicle prices, however large incumbents such as TVS Motor, Bajaj Auto, Hero MotoCorp and Ola Electric may offset part of subsidy loss through PLI scheme benefits.
“This would lead to better market share for these players, and loss of share for smaller players/startups who haven’t qualified for PLI scheme benefits, reduction in pace of EV penetration may impact valuations for companies that benefit from EV transition,” added Raghunandhan.