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Government Resumes Subsidy For Ola Electric, TVS, Ather and Vida

  • The Indian government has reinstated the subsidy for electric two-wheelers makers Ola Electric, Ather Energy, TVS, and Vida under the FAME 2 scheme.
  • Earlier, these companies were charged with taking benefit of loopholes in the FAME 2 subsidy scheme by selling chargers and proprietary software individually as separate accessories to fulfil the Rs 1.5 lakh ex-showroom requirement and qualify for the subsidy.
  • Consequently, the FAME 2 subsidy was temporarily suspended by the govt for these brands, and the manufacturers were obliged to refund their current customers.
  • As the manufacturers have now consented to reimburse their customers, the Ministry of Heavy Industry has lifted the suspension from these companies.
  • Ola Electric will be reimbursed the largest payout of subsidy, approximately Rs 370 crore, followed by Ather with Rs 275 crore.
  • TVS is expected to be refunded around Rs 150 crore, and Hero Motocorp’s electric venture Vida will receive roughly Rs 30 crore.

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What is the FAME scheme?

  • The Union Ministry of Heavy Industries provides financial assistance to electric two-wheelers through its FAME scheme, which is currently in its second phase.
  • The term FAME stands for Faster Adoption and Manufacturing of Hybrid and Electric Vehicles.
  • This program offers financial assistance to electric vehicle manufacturers, buyers, and charging infrastructure providers through incentives and subsidies.
  • In the case of electric 2-wheelers, subsidies of up to 40% are provided on locally manufactured bikes/scooters that meet specific criteria, including a minimum range of 80km per charge, a top speed of 40kmph, and the use of at least 50% locally sourced materials. However, this incentive program is applicable only to the first one million electric two-wheelers priced below Rs 1.50 lakh per unit.
  • The FAME 2 initiative is set to remain effective until March 31, 2024. However, given the recent recommendations from ETAC, which suggest a ban on diesel four-wheelers by 2027, the government might extend the FAME II program or introduce its new phase to promote electric vehicles in the country.