The government has withdrawn incentives given to mild hybrid vehicles under FAME India scheme, impacting the country's largest carmaker Maruti Suzuki India the most.
The company's popular models, multi-utility vehicle Ertiga and mid-sized sedan Ciaz with mild hybrid technology had benefited from the scheme that was launched in April 2015 to popularise the use of electric vehicles in the country.
Mild hybrid technology will stand excluded from the benefits of the FAME India scheme with effect from April 1, 2017, a notification by Ministry of Heavy Industries and Public Enterprises said.
Earlier, mild hybrid, strong hybrid, plug-in hybrid and pure electric vehicles were given incentives under the scheme.
While extending the Phase I of the scheme to September 30, the notification, however, said "sales of mild hybrid vehicles by dealer to retail purchasers effected up to March 31, 2017 will not be affected."
A mild hybrid vehicle has an electric motor, which on its own cannot run a vehicle but assists normal engine by using recovered energy stored in a battery and helps save fuel.
MSI's Ertiga and Ciaz, equipped with Smart Hybrid Vehicle by Suzuki (SHVS) technology, had received incentives of Rs 13,000 each under the scheme.
SVHS equipped Ertiga is priced between Rs 7.17 lakh and Rs 8.75 lakh while the same for Ciaz is between Rs 7.87 and Rs 9.57 lakh (ex-showroom Delhi).
When contacted, a company spokesperson said: "We believe that mild hybrid technology is the first step towards full hybridisation. MSIL is committed to this technology which is part of the government's NEMMP programme."
Ciaz and Ertiga are already equipped with this technology which is providing best in class fuel efficiency, the spokesperson added.
"We will continue to provide value to customers through this technology. We do not expect any significant impact due to withdrawal of the FAME incentive," the spokesperson said.
With an aim to promote eco-friendly vehicles, the government had launched the FAME India scheme in 2015 offering incentives on electric and hybrid vehicles of up to Rs 29,000 for bikes and Rs 1.38 lakh for cars.
It envisaged Rs 795 crore support for the first two fiscals.
FAME India is part of the National Electric Mobility Mission Plan (NEMMP). It is being administered by the Heavy Industries Ministry.