Sudden cut in subsidy for electric two-wheelers to hit industry: SMEV

New Delhi. Electric vehicle industry body SMEV on Tuesday said a sudden reduction in subsidy for electric two-wheelers could result in huge losses. The body said that this could lead to a major drop in EV adoption and impact the entire industry in the long run. However, on the other hand startup companies in the electric mobility sector have welcomed the government’s decision saying that it is time for the EV industry to stand on its own. The government on Monday reduced the subsidy on electric two-wheelers under the FAME-II (Faster Manufacturing and Faster Adoption of Electric Vehicles in India) scheme. This decision will be applicable to electric two-wheelers registered on or after June 1, 2023.

The Ministry of Heavy Industry has notified these changes. The demand incentive for electric two-wheelers will be Rs 10,000 per kilowatt hour. Reacting to the changes, Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV), said, “The sudden reduction in subsidy could lead to a big drop in EV adoption, which would have long-term ramifications for the entire industry.” The ground reality is that the Indian market remains price sensitive, he added. Most petrol two-wheelers cost less than Rs 1 lakh, and henceThe chances of spending more than Rs 1.5 lakh on an electric vehicle are slim.

Gill, however, pointed out that the Ministry of Heavy Industries had already hinted at reducing the subsidy a few months back. On the other hand, Siddharth Kabra, co-founder and CEO of Voltup, welcomed the reduction in FAME subsidy and said that now is the time for the industry to stand on its feet. He also called upon the industry and the government to work towards formulating a coherent infrastructure development policy.

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