The Indian government has extended the EV two-wheeler subsidy under the Electric Mobility Promotion Scheme 2024 until September 30, 2024, increasing the scheme's funding to Rs 778 crore to support the growing electric vehicle market.

Significant Extension of EV Subsidy

In a significant move to accelerate India's transition to electric vehicles (EVs), the Ministry of Heavy Industries has announced a two-month extension of the Electric Mobility Promotion Scheme 2024 (EMPS 2024). Originally set to conclude on July 31, the scheme will now run until September 30. Additionally, the government has increased the scheme's outlay from Rs 500 crore to Rs 778 crore.

EMPS 2024, launched on April 1, 2024, aims to promote the adoption of electric vehicles across India, focusing primarily on electric two-wheelers and three-wheelers, including registered e-rickshaws and e-carts. This scheme is designed to support the government's green initiatives and foster the growth of the EV manufacturing ecosystem in the country.

Under the revised targets, EMPS 2024 aims to support 5,60,789 electric vehicles, comprising 5,00,080 electric two-wheelers and 60,709 electric three-wheelers. The scheme places a greater emphasis on providing affordable and environmentally friendly public transportation options, particularly for commercially registered vehicles. However, privately or corporate-owned registered electric two-wheelers are also eligible for incentives.

This new scheme follows the highly successful Faster Adoption and Manufacturing of Hybrid and Electric Vehicle (FAME) II program, which concluded in March 2024 after subsidizing 13.65 lakh two-wheelers over its three-year run. The sudden withdrawal of FAME II subsidies in March 2024 had caused significant disruption in the electric two-wheeler market, resulting in major players experiencing a sharp decline in sales due to price increases of around 25 percent.

The extension and enhancement of EMPS 2024 will come as welcome relief to the EV industry, which has been eagerly awaiting government support post-FAME II. This move is expected to help stabilize the market and encourage continued growth in EV adoption.

To promote advanced technologies, incentives under EMPS 2024 will only be available for EVs equipped with advanced batteries. The scheme also includes a Phased Manufacturing Programme (PMP) to encourage domestic manufacturing and strengthen the EV supply chain, aligning with Prime Minister Narendra Modi's vision of Aatmanirbhar Bharat (Self-Reliant India).

While the extension of EMPS 2024 is a positive step, industry analysts note that challenges remain. These include the need for more liberal financing options from banks, as well as the task of appealing to traditional two-wheeler buyers beyond early adopters. Additionally, technological hurdles, such as the complexities of electrifying motorcycles, continue to impact the speed of EV adoption.

As the Indian EV market evolves, both new entrants like Ola Electric and Ather and legacy players such as Hero MotoCorp, Bajaj Auto, and TVS Motor are ramping up their efforts in the electric two-wheeler space. With the government's renewed support through EMPS 2024, the industry hopes to overcome recent setbacks.