‘2W FAME subsidy framework needs to be revamped’: Bajaj Auto’s Eric Vas

"I think there could be a more intelligent framework on subsidies, which maybe the government could be looking at," said Vas.

By Kiran Murali and Amit Vijay M calendar 25 Nov 2023 Views icon4240 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
‘2W FAME subsidy framework needs to be revamped’: Bajaj Auto’s Eric Vas

The current subsidy framework for electric two-wheelers needs to be revamped as it distorts the demand pattern, said Eric Vas, president of Bajaj Auto's electric vehicle division, while speaking at the India EV Conclave organised by Autocar Professional with the government of Tamil Nadu. 

Vas feels subsidy is a "very slippery slope" and is "extremely dangerous" to the industry for a couple of reasons. "As Bajaj Auto, I would say, the earlier they remove, the better. Let water find its level," he said.

"The way the FAME subsidy is currently structured is around the battery size. It has forced too much development of a particular kind. Is this good or bad, I think time will tell. There is no way of proving it right now," Vas said.

The government provides a demand subsidy for electric two-wheelers under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME-II) scheme.

The subsidy amounts to Rs 10,000 per kWh, capped at 15% of the ex-factory price of vehicles. Earlier, the incentive was at 15,000 rupees per kWh with a cap of 40% of the cost of vehicles.

However, this subsidy is not applicable for low-speed two-wheelers. Only high-speed models with top speed of at least 40 km per hour and minimum range of 80 km are eligible for subsidy.

Vas said mainstream manufacturers are not looking at other applications of electric scooters, such as the low-speed category, as the subsidy structure is skewed towards the high-speed category.

Bajaj Auto has a stake in Bengaluru-based shared electric mobility company Yulu, which offers low-speed electric scooters. Vas noted that low-speed electric scooters, which are not subsidised, are growing very quietly and not getting recorded.

He believes certain kinds of incentives, such as a GST holiday for the electric two-wheeler segment, would not be distortive among the categories in the segment.

"I think there could be a more intelligent framework on subsidies, which maybe the government could be looking at. The current subsidy framework certainly needs a revamp. The sooner, the better," he added.

Meanwhile, in order to maintain the momentum of electric two-wheeler adoption going forward, Vas believes reducing the cost of electric two-wheelers and increasing competitiveness are important.

The government incentives in the form of lower GST, benefits from production-linked incentive and FAME scheme, and reduction in registration and road tax in some parts today account for almost 50% of the cost of the product.

"How much of this is sustainable in the future, I don’t know. It is a good assumption that this is going to come down," he said, adding that as an industry, to maintain momentum, the focus should be on how to bring the cost down and "make ourselves competitive".

Also read: 

 

‘Electrification is a global opportunity for India:’ KK Paul of TI Clean Mobility

‘Data is a key driver of the EV transition’: Amitabh Saran

‘Industry is collectively making investments to create EV supply chain’: Suman Mishra

TN expects EV investment in the state to double to Rs 80,000 crore in two years

'We must not look at electrification merely as an ICE-to-EV transition': Arun Roy

'India must stop China comparison, focus on its own capabilities': Vivek Vikram Singh, Sona Comstar

SABIC committed to long term EV development, making significant investments in India

In manufacturing, important to look at scale in a modular fashion, says Tata AutoComp's Ravi Chidambar

TN will strive to inculcate ‘Climate Common Sense’, says Industries Minister Dr TRB Rajaa

Tamil Nadu's policies has been consistent irrespective of regimes

 

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