Eric Vas, President of Bajaj Auto's EV division, has urged the need for a comprehensive overhaul of the subsidy framework for electric two-wheelers under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME-II) scheme. Speaking at the India EV Conclave, Vas emphasized that the existing subsidy structure distorts demand patterns and impedes the growth of low-speed electric two-wheelers, such as those offered by Bajaj's associate, Yulu.
Current Subsidy Framework
- Under FAME-II, the government provides a demand subsidy of Rs 10,000 per kWh for electric two-wheelers.
- The subsidy is capped at 15 percent of the ex-factory price of vehicles.
- Only high-speed models with a top speed of at least 40kph and a minimum IDC range of 80km qualify for the subsidy.
- Low-speed electric two-wheelers, despite contributing to quiet growth, are ineligible for this subsidy.
Bajaj Auto's Perspective
- Need for Reform: Eric Vas advocates for the elimination of subsidies, stating that the current structure is "extremely dangerous" for the industry.
- Skewed Development: The subsidy structure, centered around battery size, has led to an imbalanced focus on high-speed models, neglecting potential applications in the low-speed category.
- Quiet Growth of Low-Speed Scooters: Vas highlights the unrecorded growth of low-speed electric scooters, emphasizing the need for a subsidy framework that accommodates diverse segments.
Proposed Reforms
- Intelligent Framework: Vas suggests a more intelligent subsidy framework that considers factors beyond battery size, promoting diversity in the electric two-wheeler segment.
- Incentives Beyond Subsidies: Recommends exploring alternative incentives, such as a GST holiday for the electric two-wheeler segment, to encourage balanced growth.
- GST Benefits and Production-Linked Incentives: To sustain EV adoption momentum, Vas underscores the significance of ongoing government incentives, including lower GST benefits and production-linked incentives.
Way Forward
- Eric Vas emphasizes the urgency of revamping the current subsidy framework to align with evolving market dynamics.
- Calls for a comprehensive and forward-looking approach to incentives, ensuring a level playing field for different categories within the electric two-wheeler segment.
Bajaj Auto's stance underscores the industry's call for a nuanced and adaptable subsidy policy that fosters innovation and inclusivity in India's electric mobility landscape.