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India is not buying electric two-wheelers, 0 sales in April 2019

Written by Nizam Shaikh

When we think about saving the environment, the first thing that comes to our mind in terms of transport is electric bikes. But according to a news report, the sales of eco-friendly e-bikes has almost come to a halt in the month of April as almost no sales of electric powered two wheelers were registered. The month of March, for example, saw a sales of almost 6,000 units to almost nil in the month of April from around 20 lithium-ion powered electric bike models currently on offer.

Adding to this, a manufacturer said that the vehicles have become costlier due to less subsidy and only lithium-ion battery-powered electric bikes are eligible for subsidy under the Government Of India’s new FAME II scheme.

According to the FAME Phase 2, which has come into effect from 1st of April and was only announced a month before that, an OEM (Original Equipment Mnaufacturer) in order to avail incentives is required to have at least 50% of the ex-factory value under localisation, except for buses. The battery, controller and motors alone account for more than 50% value and are currently being imported. To be eligible under the FAME India Scheme 2, each and every OEM is required to get its model certified from the recognised testing agency such as ARAI (Automotive Research Association of India) under Rule 126 of CMVR (Central Motor Vehicle Rules) which according to a manufacturer takes around two to three months and manufacturers had very little time as the new FAME II was announced only a month before it came into effect from 1st April. Once they are certified by the authorities, the electric bikes get a subsidy of INR 10,000 per kWh (Kilo Watt Hour).

Earlier, under the FAME I scheme the Government Of India had given an incentive of INR 22,000 per kWh for the electric bikes and now under the new scheme FAME II, which gives incentives of only INR 10,000 per kWh automatically makes the bikes costlier. If more subsidy was given like the earlier scheme, it would lower the end cost and attract more customers. As the Indian market is very price sensitive, a lower price and a larger price gap, between electric and petrol powered bikes will improve sales.

The Government Of India aims to sell 1 million electric bikes in the next three years, which may seem to a herculean task as only 1,26,000 units were sold in the last fiscal year, that too without facing the challenges from the new FAME II scheme.