The Ministry of Heavy Industries has submitted a recommendation to a high-level inter-ministerial panel suggesting a significant reduction in subsidies for electric two-wheelers. The proposal aims to decrease the existing subsidy from 40 percent of the total sales price to 15 percent. While the government argues that this adjustment will allow for a broader distribution of subsidy benefits among electric vehicle (EV) buyers, it raises concerns about the diminished post-purchase advantages for those investing in electric two-wheelers. Although the proposal is still awaiting approval, its potential impact on new electric scooter customers is already being scrutinized.
Similarly, a Hero Vida V1 buyer selecting the top-of-the-line Pro model, with an on-road price of Rs 1.39 lakhs ex-showroom including subsidy, would witness the ex-showroom cost increase to around Rs 1.64 lakhs, with a subsidy of Rs 25,000 instead of Rs 30,000. While it is understood that no government can sustain subsidies indefinitely, this proposal signifies a reduction in the benefits that have played a crucial role in driving EV adoption in recent years. Government sources suggest that the total fund allocation for electric two-wheelers under the FAME II scheme will be increased to Rs 3,500 crore, utilizing the unspent Rs 1,000 crore allocation originally intended for electric three-wheelers. However, the impact of this increased allocation on wider adoption of electric scooters remains uncertain, as the proposal, if approved, would require end consumers to shoulder a greater financial burden. Overall, the recommended subsidy cut raises concerns about the affordability of electric two-wheelers and the potential consequences it may have on the adoption of these vehicles.