Less Subsidy But Still Electric Two-Wheeler Sales Spike

Despite a reduction in subsidies, electric two-wheeler sales have increased in India, shows data. The Ministry of Heavy Industries revealed that a total of 734,760 electric two-wheelers were sold in the financial year 2023-2024 up to February 6, 2024. Whereas, a total of 728,271 units were sold in the previous financial year 2022-2023. And with two months still left in the FY, we can expect this number to only soar higher.

This growth comes despite the Government of India reducing subsidies from 40 percent to 15 percent of the ex-factory price under the FAME-II scheme. This reduction in subsidy rate was done to reflect the growing penetration of the EV market in India.

However, earlier this month the Ministry of Heavy Industries also revised the financial kitty of the FAME-II scheme, increasing from ₹10,000 crore to ₹11,500 crore. And in the 2024 Interim Budget, the Government also introduced two Production Linked Incentives (PLI) worth ₹18,100 crore and ₹25,938 crore. 

These PILs are expected to boost the EV ecosystem by aiming to increase Advanced Chemistry Cells (ACC) battery manufacturing capacity to 50 GWh, and enhance domestic manufacturing of Advanced Automotive Technologies (AAT) products, including both EVs and their components. 

As for FAME-II subsidies, the Government of India has already termed it as a “term-limited scheme”. In fact, the subsidy will be eligible for vehicles sold until March 31, or until the funds are available. So, moving forward we are unsure if FAME-II will continue or not, or if it will be replaced by FAME-III.