What is Fame 2 Subsidy on Electric Scooters – The adoption of electric vehicles, including buses, cars, three-wheelers, and two-wheelers, by introducing schemes that reduce the cost of EVs and offer tax rebates for those who borrow from banks to purchase them promoted by the Indian government.
State governments have also created their own plans to encourage the growth of the EV industry. The FAME II subsidy is one such program that has helped drive EV sales in India, with over 2.25 lakh vehicles sold under the scheme as of January.
What is Fame 2 Subsidy on Electric Scooters?
This article will take a closer look at what the FAME II subsidy specifically means for electric scooters and bikes, which are a major focus of the program.
About the Fame 2 Subsidy on Electric Scooters
The FAME II subsidy on Electric scooters, also known as Faster Adoption and Manufacturing of Electric Vehicles, is a scheme implemented by the government of India to promote the adoption of electric vehicles, including scooters and bikes.
The goal of the program is to reduce carbon emissions and dependence on fossil fuels by making electric vehicles more affordable for consumers.
The subsidy was launched in April 2019, with an allocation of Rs 10,000 crores to subsidize 500,000 EV3W, 55,000 EV4W, and a million electric scooters and bikes. Under the initial FAME II subsidy, any electric scooters and bikes with a minimum range of 80km (under the Indian Driving Cycle) and a minimum top speed of 40km/h were eligible for the subsidy.
Additionally, there were certain criteria related to battery chemistry and local production that had to be met in order to qualify.
In June 2021, the government revised the subsidy to offer even more incentives for the purchase of electric scooters and bikes. The subsidy was increased from Rs 10,000 per kWh to ₹15,000 per kWh, with the maximum subsidy capped at 40 percent of the cost of the vehicle.
This revision has helped to further narrow the gap in cost between traditional internal combustion vehicles and electric vehicles, making them an even more attractive option for consumers.
As a result of the increased subsidy, electric scooters and bikes have seen a surge in popularity, with 150,000 vehicles sold under the scheme following the revision in June 2021.
This is a significant increase compared to the 78,000 sold between April 2019 and June 2021. Manufacturers, such as TVs, have welcomed the increased subsidy, with Sudarshan Venu, Joint Managing Director of TVS Motor Company, stating that “Sustainable mobility solutions are very important for the future and TVS is investing significantly behind this. The improved incentives for electric two-wheelers will increase penetration.”
Despite the increase in sales of electric scooters and bikes, the government’s goal of 30% of all passenger vehicles being electric by 2030 and 80% of all two-wheelers being electric scooters and bikes by 2030 is still a long.
How was the Electric Vehicles FAME II Subsidy Conceived?
The Indian government presented the FAME (Faster Adoption and Manufacturing of Electric vehicles) scheme in April 2019 to promote the adoption of electric vehicles, including cars, scooters, three-wheelers, and hybrids, with the purpose of narrowing the price gap between traditional internal combustion vehicles and EVs. The scheme aims to decrease carbon emissions in line with the COP 21 agreement and save fuel.
The government allocated Rs 10,000 crores to the program and set a target of subsidizing 500,000 EV3W, 55,000 EV4W, and a million electric scooters and bikes. The initial FAME II subsidy was only available for electric scooters and bikes that met specific criteria, including a minimum range of 80km (under the Indian Driving Cycle) and a minimum top speed of 40km/h.
This removed many low-speed electric two-wheelers from the subsidy. The initial subsidy amounted to ₹10,000 per kWh and was restricted to 20% of the cost of the vehicle. Nevertheless, in June 2021, the government revised the subsidy to improve the rate of EV adoption, which had been relatively low until then.
What is the Current FAME II Subsidy for Electric Vehicles?
The Faster Adoption and Manufacturing of Electric Vehicles (FAME II) program in India have been revised to provide a 50% increase in subsidy, rising from Rs 10,000 per kWh to ₹15,000 per kWh, with the maximum subsidy capped at 40% of the cost of the vehicle.
This has made electric scooters and bikes more affordable compared to their petrol counterparts, and with the cost of fuel increasing, it is becoming more attractive to switch to electric mobility.
Since the revision in June 2021, an additional 150,000 vehicles have been sold under the scheme, compared to the 78,000 sold between April 2019 and June 2021.
For instance, the TVS iQube Electric scooter was earlier available at an ex-showroom price of ₹121,756 in Bangalore but is now available at ₹110,506, a price drop of ₹11,250.
In states where extra subsidies are available, the decision to buy an electric scooter may be even more clear, especially when viewing the lower maintenance fees.
Nowadays, less than 1% of total vehicle sales in India are electric. The FAME II subsidy from the central government and extra subsidies from state governments aim to change this statistic in the near
Is the Current FAME II Scheme Enough?
The Indian government has set an objective for 30% of all passenger vehicles to be electric by 2030, with a focus on 80% of two-wheelers being electric scooters and bikes.
Measures are being made to create an endurable future with lower carbon emissions and decreased reliance on fossil fuels.
However, nowadays, not all electric scooters qualify for the FAME subsidy, and calls have been made to include e-bikes as well. Manufacturers have greeted the government’s efforts and are investing in endurable mobility solutions.
Sales of electric vehicles, specifically electric scooters, have risen since June 2021 and are expected to reach over 300,000 for electric scooters independently in 2022.
Despite this improvement, the numbers are still far from the government’s target of one million scooters.
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The adoption of electric vehicles (EVs) in India is at its peak, with the expense of EVs becoming more reasonable due to subsidies like FAME II. The purpose of these subsidies is to make EVs more accessible to consumers, and as a result, more people are beginning to view EVs as a practicable option for daily conveyance.
With the cost of EVs continuing to decrease and traditional manufacturers like TVS investing in EV technology, electric mobility is becoming increasingly popular in India.
As infrastructure improves and subsidies phase out, it is expected that more and more people will consider EVs as a viable option for their daily commute.