Rationalising Subsidies: Mild Hybrid Makers On Their Own Now

In a surprise move, the Government of India has withdrawn subsidies offered to mild hybrids under its Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) scheme. In a notification dated 30 March 2017, the Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises said that ‘mild hybrid technology’ shall stand excluded from benefits under the FAME scheme starting 1 April 2017. Under the earlier scheme, mild hybrid, strong hybrid, plug-in hybrid and pure electric vehicles were subsidised by the government.

A ‘mild hybrid’ vehicle is a vehicle equipped with a battery that is insufficient to power the motor but is able to ‘assist’ the regular fuel-powered engine and therefore reduces fuel consumption.

This move will hit India’s largest automobile manufacturer Maruti Suzuki India Limited (MSIL). MSIL’s utility vehicle Ertiga and mid-size saloon Ciaz, both of which were beneficiaries for their mild hybrid models. Both the Ertiga and Ciaz, which used what MSIL terms as ‘Smart Hybrid Vehicle by Suzuki (SHVS)‘ technology were beneficiaries of a Rs 13,000 subsidy under FAME.

FAME was launched in 2015 by the Government of India under the National Electric Mobility Mission Plan (NEMMP). It provided a subsidy of Rs 29,000 for two wheelers and Rs 1.38 lakh for four wheelers with a total of Rs 795 being allocated for the first two fiscals.

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