Companies that come clean will soon get incentives under FAME-II

The government is committed to accelerating the transition to e-mobility and will release stalled incentives to all-electric two-wheeler manufacturers that receive a clean chit in ongoing investigations over the next few weeks, a senior government official said.

The government will continue to support industry stakeholders to shift to clean mobility as long as they comply with laid-down regulations and do not take "undue advantage" of its flagship incentive scheme to promote the use of electric vehicles (EVs), the official told ET.

The government has stalled disbursing subsidies of ₹1,400-1,500 crore to two-wheeler makers under the Faster Adoption and Manufacturing of Electric Vehicles-II (FAME-II) scheme for about a year now following whistle-blower allegations that they wrongfully claimed incentives without meeting local sourcing norms. This had led to a shortage of working capital for some e-two-wheeler (E2W) makers, impacting the industry's growth as per some industry insiders, as ET reported in February.

While the industry sold 846,976 E2Ws in FY23 - up 2.5 times from 327,900 units sold in FY22 - there was an "annual shortfall of more than 25% over the minimum target set by NITI Aayog" that the Society of Manufacturers of Electric Vehicles (SMEV) partly attributed to stalling of incentives.

The official cited above hinted that the incentive scheme is largely on target. "We increased the budget for incentives under FAME II three times last fiscal and have again nearly doubled it this year. We have already achieved our target, subsiding 7,210 e-buses under the scheme," said the official who did not wish to be identified. "We will continue to support the industry, provided they comply with regulations and do not take any undue advantage."

The finance ministry has allocated ₹5,172 crore to incentivise EVs under FAME-II in FY24, nearly double the outlay of ₹2,897 crore made last fiscal.