The Ministry of Heavy Industries has introduced the Electric Mobility Promotion Scheme 2024, a new initiative aimed at continuing subsidies for electric two and three-wheelers. With an outlay of Rs 500 crore, the scheme will be effective from April 1 to July 31, providing incentives for electric vehicles sold after the expiration of FAME 2 on March 31.
Background
The Electric Mobility Promotion Scheme comes as a relief, resolving uncertainties around subsidies for electric vehicles following the conclusion of the FAME 2 scheme. FAME 2, which was rolled out in 2019 with an outlay of Rs 10,000 crore for three years ending in 2022, was extended to March 2024. Last month, FAME 2's budget was enhanced by an additional Rs 1,500 crore, with subsidies applicable for vehicles sold till March 31, or till funds are available, whichever is earlier.
Scheme Details
Under the new scheme, electric two-wheelers will receive a subsidy of Rs 5,000 per kilowatt-hour (kWh), with a maximum limit of Rs 10,000 per vehicle. The total outlay for this segment is Rs 333.39 crore. Rickshaws and carts will also receive a subsidy of Rs 5,000 per kWh, capped at Rs 25,000 per vehicle, with a total outlay of Rs 33.97 crore. Additionally, electric three-wheelers in the L5 category will receive a subsidy of Rs 5,000 per kWh, with a limit of Rs 50,000 per vehicle, totaling Rs 126.19 crore.
Targeted Electric Vehicle Support
The Electric Mobility Promotion Scheme aims to support the adoption of 3.72 lakh electric vehicles, including 3.33 lakh two-wheelers and 38,828 three-wheelers. The targeted three-wheelers include 13,590 rickshaws and e-carts, along with 25,238 electric three-wheelers in the L5 category.
Industry Impact and Expectations
Subsidies have played a crucial role in driving the early-stage adoption of electric vehicles, particularly for two and three-wheelers. The industry has been seeking clarity and predictability regarding subsidies, with product development, production, and sales plans depending on subsidy timelines. The government's commitment to electric mobility through the new scheme reaffirms its support for the electric vehicle sector.
Future Expectations
The Electric Mobility Promotion Scheme is a fund-limited initiative and currently excludes electric buses and four-wheelers. However, an extension of the scheme's coverage or the launch of the third phase of FAME is expected when the government presents the full budget for the financial year 2025 in July. This scheme is a step in the right direction to promote sustainable mobility and reduce the country's carbon footprint.