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Electric two-wheelers could get more expensive as the government looks to revamp the FAME-II scheme

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  • The government is reportedly looking to revamp the FAME-II scheme for electric two-wheelers.
  • The government is expected to lower the subsidy cap for electric two-wheelers from the existing 40% of the ex-factory price to 15%.
  • The move is aimed at providing the subsidy to a wider range of vehicles.

The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme was introduced by the government to promote the adoption of electric vehicles in the country by subsidizing the cost of vehicles.

According to a report according to Economic Times, the Ministry of Heavy Industry has recommended that the government lower the subsidy cap for electric two-wheelers from the current 40% to 15% of the ex-factory price. This, the officials said, will help spread the stimulus to a wider range of vehicles.

The proposal will be sent to FAME India’s Program Implementation & Sanctioning Committee (PISC) which will make a final call for implementation.

Move aimed to subsidize more vehicles

According to officials familiar with the matter, the move is intended to increase the spread of electric two-wheelers in the market. This allows the government to subsidize more vehicles with the funds available under the scheme.

In addition, part of the subsidy allocation for three-wheelers that has not been used will also be used for two-wheelers.

“If we continue the subsidy per unit at its current level, the allocation for electric two-wheelers will be exhausted in the next two months, despite the increase in the earmarked amount,” an official told ET.

With the addition of ₹1,000 crore of unused three-wheeler funds, the allocation for electric two-wheelers under the FAME-II scheme will be increased to ₹3,500 crore.

Once the subsidy rate is reduced, we estimate that 10 lakh electric two-wheelers can be supported by FAME India till February 2024,” the official added.

Electric two-wheelers can become more expensive

While electric two-wheeler manufacturers such as Ola, TVS and Ather have not commented on the proposed changes, it is expected to impact the unit cost of scooters and could lead to electric two-wheelers becoming more expensive. India has reached out to Ola Electric, TVS Motor and Ather to understand the impact of the proposed changes and has yet to hear from the companies. We’ll update the story as the companies respond.

A petition from the Society of Manufacturers of Electric Vehicles (SMEV), an association of Indian EV manufacturers, revealed that the government withheld ₹1,200 crore in subsidies. This was allegedly done due to alleged violations of localization standards and fraudulent claiming of grants.

Soon after, companies like Ola and Ather announced that they will refund the cost of chargers to buyers.


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