The Indian government’s decision to reduce subsidies on electric two-wheelers has received criticism from industry players who believe it to be a regressive step that will negatively impact the market and hinder the adoption of electric mobility. Currently, the Heavy Industries Ministry is planning to increase the allocation for e-two-wheelers under the FAME-II scheme, but at the same time, it aims to decrease the subsidy per vehicle from 40 percent to 15 percent of the ex-factory price.
Society Of Manufacturers Of Electric Vehicles (SMEV) Director General, Sohinder Gill, expressed concerns about the sharp reduction in subsidies, stating that it could significantly decrease the demand for electric two-wheelers. The Indian market is known for being price-sensitive, and consumers are yet to fully consider the total cost of ownership when making purchasing decisions. With the majority of petrol-powered two-wheelers priced below Rs 1 lakh, it is unlikely that consumers will be willing to spend over Rs 1.6 lakh, factoring in the total cost of ownership for electric two-wheelers.
Gill emphasized that a gradual transition with sustained subsidies would have been more ideal for ensuring market growth and achieving the international benchmark of 20 percent EV market share. However, the sudden and substantial reduction in subsidies is expected to lead to a major decline in sales, impacting the entire industry for a significant period. This move could also have broader consequences, such as increased bills for crude oil imports and worsening air pollution in cities.
Ayush Lohia, CEO of Lohia Auto Industries, shared similar concerns, highlighting that the reduction in subsidies poses a significant challenge for the nascent electric vehicle industry. Lohia believes that this decision could hinder the growth and adoption of electric two-wheelers in the country. In the crucial early stages of market development, sustained support from the government is crucial to build consumer confidence and ensure the success of the electric two-wheeler segment.
Gill further pointed out that if subsidies are reduced, premium electric bikes may witness the biggest decline, as their subsidy reduction would be the highest. In response, companies might consider launching stripped-down versions of their models to maintain market shares.
The industry players are urging the government to reconsider its decision and prioritize long-term sustainability over short-term gains. They believe that sustained support and gradual transition with subsidies are essential to drive market growth, encourage consumer confidence, and promote the wider adoption of electric mobility in India.
In conclusion, the reduction in subsidies on electric two-wheelers by the Indian government has raised concerns among industry players. They believe that this decision will negatively impact the market, hinder the adoption of electric mobility, and pose challenges to the nascent electric vehicle industry. Sustained support and gradual transition with subsidies are seen as crucial for long-term sustainability and the success of the electric two-wheeler segment in the country.