Government of India to Reduce the Subsidy on Electric Two Wheelers to 15%

It has been notified that the subsidy of 40% currently available on electric two-wheelers is going to be reduced to 15%. The change will come to effect starting from the 1st of June, 2023.

Read more about it below.

Electric Two-Wheeler Subsidy to be Reduced to 15%

The Heavy Industries Ministry of the country has now notified that the government has taken the decision to reduce the current subsidy rate which EV customers are receiving under the FAME-II (Faster Adoption of Manufacturing of Electric Vehicle in India) scheme. Starting from the 1st of June 2023, the current subsidy of 40% will be reduced to 15%. The subsidy will be reduced to Rs. 10,000 per kilowatt hour from the Rs. 15,000 that EV customers are receiving now.

Many startups have welcomed the decision and the Heavy Industries Ministry had previously hinted at such a step, as the EV two-wheeler sales of the country was approaching its target of 1 million sales in four years.

However, the SMEV (Society of Manufacturers of Electric Vehicles) Director General, Sohinder Gill stated that the sudden decision is likely to create a decline in EV sales.

Sohinder Gill says that there are petrol scooters available in the country which are priced below 1 lakh and since the Indian market is price sensitive, customers would always hesitate to buy a scooter(EV) that costs more than 1.5 lakhs. At this point, a sudden reduction in the subsidy will surely lead to an increase in electric two-wheeler prices and this might lead to a second thought in the minds of the customers who would’ve had some idea of getting an EV two-wheeler.

He further mentions that a gradual reduction was the right step and it would have increased the current EV adoption rate of the country from 4.9% to the international benchmark of 20%.