Government reduces subsidy on e-scooters from June 1

From tomorrow, customers will not enjoy the subsidy that the Government was offering under the FAME-II scheme

T P Venu

The worst fears of customers planning to purchase e-two-wheelers are coming true with the Government pulling back the subsidy to a great extent. The ministry of heavy industries rejecting the subsidy claims of manufacturers for over 400,000 e-scooters, stating that they flouted localization norms laid down by the government’s FAME-II incentive scheme.

Govt reduces subsidy to the extent of 40% of an electric two-wheeler’s ex-showroom price to now only 15% of its ex-factory price. Mohanan, K P from Bengaluru asks, “Is this the way the government promotes e-vehicles? We talk about pollution and climate change but the policies do not help matters. I was planning to buy an e-scooter and now I have postponed my plans.”

There is also another rider, a customer wishing to avail a subsidy has to purchase a vehicle of a maximum ex-factory price of ₹1.50 lakh to avail FAME-II incentives. It may be noted that the e-vehicles market is greatly dependent on e0scooter sales. In the past e-two-wheeler makers could claim up to ₹60,000 in subsidies per vehicle, will now only be able to claim a maximum of ₹22,500 subsidy per vehicle.

The Govt has received claims for nearly 1 million e-scooters by the end of May but rejected more than 400,000 of those for non-adherence to localization norms. The move will impact three large manufacturers the most —Hero Electric, Okinawa Autotech and Greaves Cotton’s Ampere—which were served notices by the government to repay subsidies.

The number of vehicles incentivized under FAME-II segment wise is as follows: 2-wheelers 5,63,760, 3-wheelers is 74,063 and four wheelers is 6,784. The ministry keeps track of how many vehicles have been incentivized under the scheme, brought down the number of e-two wheelers in its FAME-II tally from nearly 980,000 to 564,000. Investigations found them guilty of flouting the phased manufacturing program (PMP) norms, which lay down localization- related criteria for subsidies under FAME-II.