EV demand incentives cannot continue forever, says Anish Shah

As the FAME scheme moves to its third leg in the form of PM E-Drive and the government plans gradual reduction in subsidies, FICCI President Anish Shah believes demand incentives cannot continue forever and have to be reduced and finally go away.

"Incentives cannot continue forever and have to be reduced and finally go away, the government cannot continue to subsidise automobiles forever," said Shah, who is also the managing director of Mahindra & Mahindra.

He was speaking at the "FAME’s Success in Transforming India’s EV Landscape: From Vision to Reality" seminar organised by the Ministry of Heavy Industries.

Shah's comments come as the 2-year Rs 10,900-core PM E-DRIVE scheme will initially continue with a lower subsidy per vehicle compared to FAME II, but the subsidies will be halved in the second year.

Citing the per vehicle subsidy reduction for electric three-wheelers, Dr Shah said incentives have come down with every scheme. "FAME-2 had allocated subsidy of Rs 1 lakh for per three wheeler, under EMPS it was Rs 50,000, and FAME-3 (PM E-Drive) continues at Rs 50,000 per three wheeler, right now and will be Rs 25,000, a year later and potentially zero after that," he said.

Earlier, Minister of Road Transport and Highways Nitin Gadkari had also said that he feels electric vehicles don’t need subsidies, as the number of vehicles are going to increase, the cost of these vehicles is going to reduce.

Currently, electric vehicle adoption in India is at its nascent stage with overall penetration close to 7%. Two-wheelers accounted for 56% of the electric vehicle sales in the last financial year, while three-wheelers constituted 38%. Affordability and limited charging infrastructure have been major hurdles in the faster adoption of electric vehicles.

Charging infrastructure is getting a major boost in the PM E-Drive scheme, which
has more than doubled the outlay for charging infrastructure to Rs 2,000 crore with a target to support 88,500 sites.

The scheme proposes the installation of 22,100 fast chargers for electric four-wheelers, 1,800 fast chargers for electric buses and 48,400 fast chargers for electric two- and three-wheelers.