DHI increases Electric two-wheelers Subsidy, modifies FAME 2 Incentives

Electric two-wheelers Subsidy

As per a the notification issued on 11th June 2021, the Department of Heavy Industries (DHI) has announced increase in the electric two-wheelers subsidy in India. The announcement came in form of partial modification of the Scheme for Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II).

As per the notification, the incentive for electric two-wheelers has been increased to ₹15,000 per kWh, up by ₹5,000 per kWh from the earlier subsidy rate. Additionally, the cap on incentives for Electric 2 Wheelers will be 40% of the cost of vehicles.

According to the scheme, the electric two-wheelers looking to benefit need to have certain parameters like minimum top speed, range per charge, acceleration and energy consumption efficiency to qualify for FAME II benefits. Consequently, only the high-speed electric scooters powered by higher than 250 watt electric motor and have a top speed of above 25 kmph, are eligible for the FAME-II subsidy, which varies depending on the price of the electric scooter. Further, the electric scooters need to deliver a minimum range of 80 kms on a single charge and must have a top speed of at least 40 kmph to qualify for the subsidy.

This move will directly help customers who choose to buy an electric two-wheelers in India as the price of 2W-EV’s will drop. Ather Energy, one of India’s fastest growing electric two-wheeler manufacturing company, was one of the first to pass on the incentive to its customers. The company has announced that Ather 450X will now cost ₹14,500 less after FAME II subsidy revision.

Out of the ₹10,000 crore subsidy earmarked in the FAME-II scheme, two-wheelers are the largest beneficiary, specially the e-scooters. However, not every electric two-wheeler may benefit from this scheme. According to a report by CRISIL, around 95% of the electric scooters in India are not eligible for the FAME-II subsidy.

The central government will also procure electric buses and three-wheelers on a large scale. EESL will aggregate demand for 3 lakh Electric 3 Wheelers for multiple user segments. For Electric Buses, 4 million plus cities (Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat, and Pune) will be targeted. EESL will go for aggregation of demand in these 9 cities for remaining E-buses under the Scheme on OPEX basis.

DHI notification on Electric two-wheelers Subsidy Increase – Download PDF