Electric two-wheeler maker Hero Electric has put on hold investment of up to Rs 700 crore for a year as FAME II, a scheme aimed at promoting electric vehicles in India, has failed to deliver, a top company official has said.
Calling for a complete revamp of the policy, Hero Electric wants the government to include low-speed electric two-wheelers for subsidy, arguing that for mass adoption of electric vehicles in India these cost effective vehicles are critical.
“From an industry standpoint, there was a certain trajectory which was going on when we had FAME I. With the coming in of FAME II, whatever be the logic and reason, the manner in which FAME II was introduced, the whole industry took a downturn and now the industry is recovering from that,” Naveen Munjal, managing director at Hero Electric, told the Press Trust of India.
Under FAME I, electric two-wheelers with top speed of up to 25 km/hour had qualified for incentives of up to Rs 17,000. The high speed elecric two-wheelers stood at Rs 22,000.
However, under FAME II, which came into effect on April 1, 2019, electric two-wheelers are mandated to have a minimum range of 80 km per charge and minimum top speed of 40 kmph to qualify for an incentive of Rs 20,000.
Ratings agency Crisil Ltd. had predicted that more than 95 percent of the electric two-wheeler models produced earlier would not be eligible for incentives under FAME-II.
“It has taken a lot of time. Technically, one year is almost wiped out from our balance sheet,” Munjal said, adding it made no sense to go ahead with investments as the company had to first get the products out of the door.
Reference- livemint, PTI, Economic Times