View: India should ramp up consumer subsidies for EVs, instead of rolling them back

economictimes.indiatimes.com:

electric vehicle (EV) strategies are. While the USA has extended its EV support policies through the landmark Inflation Reduction Act (IRA), India, on the other hand, recently cut subsidies for electric two-wheeler EVs (E2W) under the flagship demand incentive scheme, Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II). This decision could prematurely halt the growth of the EV sector in India.

Instead, the government should be ramping up subsidies to ensure a successful decarbonization of its transport sector. The USA’s decision to prolong tax credits of up to $7,500 for light-duty EVs through 2032 and other measures under the Inflation Reduction Act (IRA) have sparked a growing international competition to accelerate EV deployment and capture a larger share of the battery supply chain. China, a front-runner in EV adoption across the world, has recently announced a new package of incentives and tax breaks worth $72 billion to promote EVs and other green vehicles.

India’s support for EVs dwarfs in comparison to these support measures. With a budgetary expenditure of ~Rs. 3,800 Cr.

( $460 million) to date, the scheme has helped subsidize 785,000 EVs. Among those, 695,000 were E2Ws, making up 67% percent of all EV sales last month and contributing to the policy’s overall success so far. The decision to reduce support under FAME-II-from INR 15,000 per kWh battery capacity to INR.

10,000 per kWh for electric two wheelers (E2Ws) registered on or after 1 June 2023-risks impacting the country’s nascent EV ecosystem. Incentives for E2Ws will now be capped at 15% of the ex-factory price of vehicles, down from 40% of the ex-showroom price.