Key Points
While the USA has extended its EV support policies through the landmark Inflation Reduction Act (IRA), India, on the other hand, recently cut subsidies for electric two-wheeler EVs (E2W) under the flagship demand incentive scheme, Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II)..
The decision to reduce support under FAME-II-from INR 15,000 per kWh battery capacity to INR. 10,000 per kWh for electric two wheelers (E2Ws) registered on or after 1 June 2023-risks impacting the countrys nascent EV ecosystem..
In fact, the Parliamentary Committee on Estimates earlier this year evaluated Indias EV policy, finding that the removal of government support would result in a significant price escalation of EVs and recommended an extension of the FAME-II scheme by an additional two years...
In fact, Indias support for EVs is the lowest among different energy technologies, with a recent analysis by the International Institute for Sustainable Development (IISD) showing that consumption subsidies for oil and gas in FY2022 alone wereat ~INR 30,000 Cr (USD 3.6 billion)almost seven times higher than the cumulative subsidies under the two phases of the FAME scheme since 2015..
The Government of Indias think tank NITI Aayog concluded that a successful rollout of FAME-II and other policy measures could lead to an EV sales penetration of 30% for private cars, 70% for commercial vehicles, and 80% for two- and three-wheelers by 2030..
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