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NEW DELHI: The government is set to announce a subsidy of up to Rs 2.5 lakh for 60,000 electric cars and dole of up to Rs 20,000 for 20,000 hybrid cars that are bought over the next three years as it seeks to promote green fuel in the country via a Rs 10,000-crore package.

An overwhelming majority of the funds would be allocated for electric two-, threewheelers and buses used for public transport, sources familiar with the proposal told TOI. Even e-rickshaws will be eligible for subsidy.

Going by this formula, which is linked to the battery capacity, a buyer of Mahindra E-Verito may get a subsidy of around Rs 1.5 lakh, while a buyer of a good quality electric two-wheeler could get around Rs 40,000. For electric buses, the subsidy would be up to Rs 60 lakh.

The Cabinet is likely to take up this proposal as part of the second phase of Faster Adoption and Manufacturing of (Hybrid & Electric Vehicles ) India (FAME) scheme on

Thursday. In its bid to bring visible impact, the government has almost doubled the allocation for the scheme from Rs 5,500 crore proposed earlier.

The scheme will come into effect from April. The government will also put a cap of Rs 15-lakh ex-factory price of a vehicle, except buses, to avail of the subsidy. The subsidy calculation will be linked to the battery capacity of the respective vehicle — Rs 10,000 per KWh for all vehicles and Rs 20,000 per KWh for buses.

Sources said that the demand incentive in the form of subsidy will have a major impact on two- and three-wheelers as people will find it attractive to go for electric vehicles by paying the same amount that they would have paid for a petrol vehicle. “There will also be huge focus on expanding the charging infrastructure in cities and along highways to meet the demand. Another focus area will be on developing our capacity to produce lithium ion batteries for vehicles,” said a source.

