The support for purchase of private electric two-wheelers may be gradually phased out, said a person in the know of the developments.

“There is a view that the subsidies should gradually be phased out for private two-wheelers and assistance should go for public transport and charging infrastructure,” the person added.

The proposal comes at a time EVs have by and large penetrated the two-wheeler segment, while electric buses are yet to gain momentum.

The ongoing FAME II scheme was started on 1 April 2019, with budgetary support of ₹ 10,000 crore. This phase focuses on supporting electrification of public and shared transportation and aims to support 7,090 buses, 500,000 three-wheelers, 55,000 passenger cars and 1 million two- wheelers through demand incentivization along with the creation of charging infrastructure. The scheme has been extended till March 2024.

As of 1 August 2023, the ministry of heavy industries had sanctioned 6,315 electric buses for 65 cities, state transport units or state governments intracity operations. Another 753,140 two-wheelers, 85,168 three-wheelers and 9,270 four-wheelers have sold under the scheme, according to data presented by Krishan Pal Gurjar, in the union minister of state for heavy industries, Parliament.

Data from the ministry showed that in FY23, only 1.88% of buses sold in the country were EVs.

In May, the ministry increased the funding support for e-buses to ₹4,307 crore from the budgeted ₹3,545 crore. Further, the union cabinet last week approved a bus scheme, the PM-eBus Sewa, for augmenting city bus operations by 10,000 e-buses on a PPP model.

The scheme has an estimated cost of ₹57,613 crore, out of which a support of ₹20,000 crore will be provided by the government.

Mint earlier reported that allocation for FAME III may jump to around ₹30,000 crore from ₹10,000 crore earmarked for the current FAME II scheme. The scheme is expected to increase incentives for e-buses.

Amid consultations industry stakeholders have suggested bringing in more sectors under the subsidy scheme including private bus fleets.

“We would suggest that assistance under FAME scheme is given to more sectors including trucks, heavy duty vehicles, farm tractors and off-roading vehicles. Further, private fleets of buses can also brought under the ambit of FAME as currently buses of state transport undertakings only are supported. There is a need to broaden the beneficiary base adding more vehicle segments,” said Rahul Walawalkar, President, Indian Energy Storage Alliance.

Queries sent to the ministry of heavy industries remained unanswered till press time.

He further said that battery swapping infrastructure should be supported by the government under the programme.

Rajat Verma, Founder and CEO of Lohum Cleantech, a battery recycling company, was of the view that incentives should flow more towards the segments which lead to higher carbon emission.

“Given the nature of this transition and given that it requires a whole ecosystem to come together, there would be the need for fine tuning the policy, fine tuning the subsidy, but (it should be done) along with ensuring that every category of vehicle which does significant contribution to the carbon footprint gets supported in their transition journey,” he said.

The consideration for gradual shift of focus to e-buses also comes in the backdrop of alleged wrongdoings by several EV two-wheeler makers in the FAME II incentive scheme, from violating indigenization norms to selling chargers over and above the cost of the vehicle.

The heavy industries ministry’s report card of nine years acknowledged that the lessons learnt under FAME 2 include use of imported parts, change in supply chain after issue of certificate, routing of imports through traders and destruction or non-maintenance of records. These issues are expected to be addressed in the new scheme which is under consultation.

Updated: 20 Aug 2023, 10:37 PM IST