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Source: The post is based on the article “Govt cuts subsidy on electric 2-wheelers” published in Livemint on 22nd May 2023
What is the News?
Ministry of Heavy Industries has cut the subsidy on electric two-wheelers in an effort to overhaul the financial incentives given to this growing industry.
The government has announced that the subsidy for electric two-wheelers would be reduced to ₹10,000 per kilowatt hour (kWh) effective 1 June from ₹15,000 currently.
The lower subsidy would be applicable to all electric two-wheelers registered on or after 1 June 2023.
Further, the cap on incentives for such vehicles has been lowered to 15% of the ex-factory price of vehicles from the earlier 40%.
But the total amount allocated toward providing incentives for these vehicles will be raised from the current ₹2,000 crores.
Why has the government reduced subsidies on electric two-wheelers?
The intention behind lowering the subsidy and increasing the funds for electric two-wheelers is to support more consumers through the FAME scheme with the available funds.
What is a FAME Scheme?
The FAME Scheme was launched in 2019 for a three-year period. The scheme has now been extended until 31 March 2024.
The scheme provides incentives for electric vehicles in the segments of electric three-wheelers, electric four-wheelers, and electric buses. Privately owned registered electric two-wheelers are also eligible for subsidies.