Manufacturers expect the adoption of electric two-wheelers to accelerate as their price premium over conventional vehicles has narrowed substantially after the central government increased subsidies on these vehicles under its flagship electric vehicle (EV) promotion scheme.

The Department of Heavy Industries last Friday increased the subsidy per electric two-wheeler, which is linked to the battery size, to Rs 15,000 per kilowatt-hour from Rs 10,000.

It also doubled the cap on subsidy to 40% of the price of the vehicle from 20%. The measures are part of the Faster Adoption and Manufacturing of Electric Vehicles in India Phase II scheme (FAME-II), which has a financial outlay of Rs 10,000 crore to promote EV adoption in the country.

Based on the incentive on Ather 450 X, one of the popular models which are subsidised, has increased to Rs 43,500 per unit from about from about Rs 29,000, bringing its ex-showroom price to Rs 1.45 lakh.

Prices of low-speed vehicles are expected to get competitive with conventional two-wheelers. Hero Electric, Okinawa Autotech, Ampere Vehicles, Revolt Motors, Ather Energy, NSE -0.18 % and TVS Motor are some of the manufacturers which stand to benefit from these subsidies. Tarun Mehta, the chief executive of Ather Energy called the increase in subsidy the demonetisation moment for the EV industry. “Just like how demonetisation overnight gave a boost to the fintech industry, this will boost the EV industry,”.