India govt likely to slash FAME 2 subsidy

The government of India is likely to reduce the subsidy offered on electric vehicles under the FAME 2 scheme.

According to media reports, the Ministry of Heavy Industries has proposed a new formula to calculate the subsidy for EVs, which could see the existing subsidy of Rs 15,000 per kW reduced to Rs 10,000 per kW. The maximum cap on subsidy is expected to be brought down from 40% to 15% of MRP.

If the new plan goes through, the subsidy for electric 2-wheelers with a battery capacity of 3.5 kW and a price tag of Rs 1.5 lakh will work out to Rs 22,500. For EVs with a 3 kW battery and a price tag of Rs 1.3 lakh, the subsidy would be Rs 19,500, while electric 2-wheelers with a 2.2 kW battery and a price tag of Rs 1 lakh would receive a subsidy of Rs 15,000.

Reports suggest that with the revised subsidy structure, more models will qualify for the FAME 2 subsidy, but each vehicle will receive a smaller amount of subsidy. This is in line with the government’s plan to support the sales of over a million EVs under the FAME 2 scheme by next year.