The Indian government’s proposal to scrap a subsidy for private buyers of electric cars has drawn flak from car manufacturers.

Currently, as part of the Faster Adoption and Manufacturing of hybrid and Electric (FAME) scheme, people buying an electric vehicle are granted an incentive of 130,000 rupees.

But part of the second phase – FAME 2.0 – is for the subsidy to be scrapped. Instead, the government would provide cash incentives to cab aggregators using electric vehicles.

Government officials argue that electrifying public transport networks first would create a sustainable eco-system for electric vehicles and also raise awareness about their benefits.

However, the country’s second-largest carmaker Hyundai has strongly come out against the government’s proposed move, saying it would the pace of electric mobility, Times of India has reported.

Hyundai India managing director Y.K. Koo told the daily that new technologies, especially clean-fuel users, require government support as well as consumer subsidies to gain traction. He felt scrapping them would lead to a rise in prices and fall in sales. Koo feared they may get reduced to mere ‘showcase products’.

Hyundai plans to launch its Kona electric SUV in India next year, and this is likely to cost 2-2.5 million rupees.

A recent joint study by leading industry body Assocham and global advisory services firm EY noted that the electric-vehicle industry in India was at a nascent stage, comprising less than 1% of total vehicle sales, but said the Indian government’s push and increasing consumer awareness was driving the adoption of electric vehicles. It said charging infrastructure needed to be created rapidly.