Tarun Mehta, CEO of Ather Energy, says that the FAME-II subsidy is necessary for a few more years before it can be gradually reduced. He says that a sudden reduction of subsidy has already cost Ather Energy one year’s growth in 2023, and he fears that if the subsidy is discontinued in March this year, it would affect the industry for another year or two.
Speaking at the 10th Global Summit of Vibrant Gujarat, Mehta said, “We finished calendar year 2023 with the same volume as what we began the calendar with. If things had gone to plan, we would have at least doubled that. So, we lost 1 year of growth,” he explained.
The FAME-II scheme, with an outlay of Rs 10,000 crore, was initially rolled out for three years ending in 2022, but was later extended till March 2024. In June 2023, the government had slashed the subsidy for electric two-wheelers to Rs 10,000 from Rs 15,000 per kWh. They had also reduced the cap on incentives for a two-wheelers' ex-factory price to 15 percent from 40 percent.
The subsidy was reduced after the funds envisaged for the two-wheeler segment were exhausted, but the government had also revised the scheme outlay for electric two-wheelers to Rs 3,500 crore from Rs 2,000 crore to continue the subsidy.
Mehta believes that the industry is no longer in a place where if you “pull off the subsidy, everyone will die.” However, “if the subsidy stops early in April, we will all tighten up our belts and work hard, but then yet again, there will be 1 or 2 more years of no growth, which is just pushing back our target,” added Mehta.
Sullaja Firodia Motwani, the vice chairperson of Kinetic Green and chairperson of FICCI's Mobility Forum too echoed Mehta’s sentiments and said that demand incentives are needed for at least five years till EV market share does not reach 20-25 percent. “At the penetration level of 20-25 percent there will be a momentum, which will ensure the sector stands on its own without any support,” added Motwani.
With inputs from AMIT VIJAY.
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