MICRORCONOMICS ARTICLE

Subsidies for EVs in India increased 160%, reached record high of Rs 2,358 crore
in FY222: IISD report

A recent study conducted by the International Institutes for sustainable

development (IISD)shows that subsidies for renewable energy and electric
vehicles have more than doubled in FY22 at Rs 2,358 crore, when
compared to FY21. The rise in EV subsidies is being attributed to growing
stability in policies, post-COVID economic resurgence and the increased
uptake of EV’s that has encouraged growing subsidies on such vehicles.
The report further states that in 2021, EV’s consisted of just 1.1 percent of
total vehicles sold in the country. This market share is expected to reach
39 percent, 95 percent of electric vehicles registered in India were 2W and
3W.
The rising EV adoption and subsidy share is being driven by the
government’s FAME scheme that reportedly paid out of Rs 800 crore in
FY22. However in the grander scheme of things, majority of the Rs 10000
crore allocated to FAME in 2020 still remains unspent and valid up till
2024. EV subsidies include of GST on sale of an electric vehicle.
The IISD report further states that subsidies on domestic manufacturing of
EV’s and advanced battery technologies is likely take place as the central
government implements its PLI scheme for the automobile and auto
components industry for advanced Chemistry Cell Battery Storage. The
PLI scheme was announced first in FY21 for Rs. 18.100 crore and for Rs
25,938 crore in FY22.
While these are encouraging developments for the EV sector, India still
allocated four times more subsidies to fossil fuels than clean energy. The
report states the total subsidies towards coal=, fossil gas and oil totalled at
Rs 60,316 crore in FY22.