EV Subsidy : The Government of India launched the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme in 2015. This scheme was created to encourage e-vehicles. Under the FAME-II scheme, the government provides direct subsidy on the purchase of electric vehicles. Till now automakers were launching electric vehicles for sale under the FAME 2 scheme. Earlier this year in 2024, the Ministry of Heavy Industries had announced the discontinuation of subsidy under the FAME-2 scheme on March 31. In its place, the government introduced a new Electric Mobility Promotion Scheme (EMPS) 2024 till July 31, which was later extended till September 30. Under this, the benefit of financial assistance of Rs 10,000 on two-wheelers, Rs 25,000 on small three-wheelers and Rs 50,000 on large three-wheelers is being given.
With this, now the Government of India is preparing to approve the third phase of FAME in 1-2 months. However, the exact date has not been revealed yet. Meanwhile, a recent statement by Union Minister Nitin Gadkari has created a stir in the electric vehicle market. In which Union Minister Nitin Gadkari said on Thursday that there is no need to give subsidy for electric vehicles (EV). Because consumers are now choosing EV or CNG vehicle on their own choice. Which is being considered a sign of ending subsidy on electric vehicles. He said that an inter-ministerial group is working on the inputs received for the FAME 3 scheme, in which efforts are being made to resolve the issues in the first two phases of the Hybrid and Electric Vehicle (FAME) scheme.
Decrease in manufacturing cost of electric vehicles
Addressing the BNEF summit, Gadkari said, “Consumers are now themselves getting attracted towards the purchase of electric and compressed natural gas (CNG) vehicles, so I do not think there is any need to give more subsidy for electric vehicles. While with the inclusion of the EV segment, the cost of manufacturing electric vehicles was also much higher in the beginning than at present. At the same time, with the increase in their demand over time, their production cost kept decreasing. After which there is no need for further subsidy.
GST cost is low on electric vehicles
The Transport Minister also said in his statement that the GST cost on electric vehicles is much less than that on petrol and diesel vehicles. He said, “Taking into consideration all these points, in my opinion, there is no longer any need for the government to provide subsidy to promote the manufacturing of electric vehicles. The demand for subsidy by EV vehicle manufacturers is no longer justified.”
After this statement, a big challenge has arisen in front of the electric vehicle manufacturing companies, along with which the relief of getting discount in the price of electric vehicles due to subsidy is now likely to end for the customers as well.
