Electric Two-Wheelers May Get Costlier As Government Mulls Subsidy Cut

The Indian government is reportedly mulling a cut to the per-unit subsidy for electric two-wheelers while widening the number of vehicles that are incentivised.

What Happened? the government is thinking about reducing the subsidy on electric two-wheelers to 15% of sale price from 40% currently, officials told the Economic Times.

While the subsidy reduction will likely make electric two-wheelers more expensive for consumers on a per-unit basis, the government could expand the subsidy to a wider range of vehicles that currently receive no subsidies.

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Electric vehicle makers currently receive financial aid under the ₹10,000 crore Faster Adoption and Manufacturing of Electric Vehicles in India (FAME India) incentive scheme.

The officials told the business daily that the total allocation of funds for electric two-wheelers under phase II of FAME India will be increased by ₹3,500 crore, including an unspent ₹1,000 crore allocation for electric three-wheelers.

"Once the percentage of subsidy is lowered, we estimate that 10 lakh electric two-wheelers can be supported by FAME India till February 2024," an official told Economic Times.

The FAME scheme has so far benefitted around 5.63 lakh two-wheelers in the country.

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