The Indian Government is not in favour of extending the electric vehicle (EV) subsidy scheme, which is the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme beyond March 2024. However, a final decision has not been taken yet. EV subsidies to the tune of Rs 1,200 crore have been on hold for more than 13 EV players for close to a year now.
In an interview with CNBC-TV18, Rajiv Bajaj, MD of Bajaj Auto said that India cannot build a future with so many subsidies in any sector and subsidies masks reality and blunts innovation.
He said, “Subsidies going away, in my view, should not really have that bigger impact in the long run because the future of EVs in India will be built on the back of sounds strategy, not subsidy, the subsidy is not a strategy and, in my view, subsidy disrupts strategy, subsidy masks reality and subsidy blunts innovation.”
Bajaj further emphasized that he is not a fan of subsidies of any kind. He pointed out that one can buy a Rs 20 lakh car today and get a Rs 2 lakh subsidy on it, which he believes is not a sustainable model for any industry. Such subsidies provide an unfair advantage to certain segments of the population and can even lead to market distortions.
Bajaj also spoke about the recent withdrawal of FAME (Faster Adoption and Manufacturing of Electric Vehicles) subsidies, stating that it will not have a big impact in the long run. While the move may have an immediate effect on the electric vehicle industry, Bajaj believes that it will ultimately lead to more innovation and self-sufficiency in the sector.
Many economists argue that subsidies create an environment where companies and individuals become complacent and rely on government support instead of working towards innovation and self-sufficiency. This, in turn, hinders the growth of the economy as well as the overall development of the nation.
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