Government Withdraws Subsidy For Mild Hybrid Vehicles

The government of India in the past two years offered benefits worth Rs 60 crore to carmakers in India under the FAME scheme. Almost Rs 40 Crore of the funds allotted (around 60 percent) were directed towards mild hybrid vehicles.

The company most affected by the withdrawal of the subsidy is Maruti-Suzuki, which offers the Ertiga MPV and Ciaz sedan with the mild hybrid technology. The mild hybrid Maruti CIAZ SVHS is India's most fuel efficient car and returns a mileage of 28.09 km/l (ARAI).

When contacted, a Maruti Suzuki spokesperson told PTI, "We believe that mild hybrid technology is the first step towards full hybridisation. MSIL is committed to this technology which is part of the government's NEMMP programme. We will continue to provide value to customers through this technology. We do not expect any significant impact due to thewithdrawal of the FAME incentive."

The removal of subsidies may feel like a wrong move in a price sensitive market like India. However, the move is a good one as it will encourage carmakers to focus on more environmentally friendly vehicles including full-hybrid and electric cars.