The Ministry of Heavy Industries has announced a new scheme to provide incentives for encouraging widespread EV adoption. Under this new scheme, manufacturers of electric two-wheelers and three-wheelers will get a subsidy at the manufacturing level. Notably, this will kick in just as the FAME II subsidies which were offered till now expire later this month. That said, the ministry is yet to clarify on any scheme for 4 wheelers or heavy and commercial vehicles powered by electricity.
With an initial outlay of Rs. 500 Crore, the ministry has allocated Rs. 333.4 Crores for incentivising two wheeler manufacturers along with another Rs 126.19 Crore for L5 category EV 3 wheelers. This is of course, subject to criteria such as compulsory 3 year battery warranties, adequate after sales service networks, local manufacturing etc. The subsidy for each model will be calculated at a rate of Rs. 5000 per kWh for electric two and three wheelers with a cap at the maximum of 15% of ex-factory prices by manufacturers. While the aim of the ministry is to push commercial EVs, private and corporate registered vehicles will also be eligible for the same. The government targets to incentivise a total of 3,72,215 electric vehicles under this scheme.
The new scheme replaced the FAME II scheme which ends on March 31st 2024 or till funds remain available and was responsible for faster adoption of EVs till now. However the EMPS scheme will only be applicable for vehicles manufactured in the four months from April 1st to July 31st 2024.
Prominent EV makers such as TVS and Ather have previously voiced concerns over the lack of predictability and clarity on such schemes and claim that this makes it difficult to plan strategies and streamline the development of future products. The new scheme will affect popular electric two wheelers such as the TVS iQube which may result in a significant price hike for the consumers.
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