FAME II: India Approves Second Phase Of Electric Vehicle Scheme With Higher Outlay

India approved the second phase of a scheme to boost electric mobility with a higher outlay as it looks to have at least 30 percent of the vehicles powered by battery in little over a decade.

The Cabinet Committee of Economic Affairs on Thursday approved a Rs 10,000-crore package for the next phase of Faster Adoption and Manufacturing of Electric (and hybrid) Vehicles scheme, according to a government notification.

It offers upfront incentives on purchase of electric vehicles besides setting up charging infrastructure and focussing on electrification of public transport.

India has set a target of achieving 30 percent electric mobility by 2030 in order to cut reliance on fossil fuels to curb pollution and reduce its import bill. Nitin Gadkari, union minister for road transport, highways and shipping, had said that India aims to have at least 15 percent electric vehicles on its roads in five years.

Through the FAME II scheme, an extension of FAME I, the government plans to support 10 lakh electric two-wheelers, 5 lakh three-wheelers, 55,000 four-wheelers and 7,000 buses. “For more than two years, the industry has been waiting for the announcement of a long-term policy including the FAME II scheme,” Rajan Wadhera, president at SIAM, said.

Features of the scheme:

• Three-wheeler and four-wheeler segment incentives will be applicable mainly to vehicles used for public transport or registered for commercial purposes.
• For the two-wheeler segment, the focus will be on the private vehicles.

The Rs 10,000-crore outlay for FAME II policy for the next three years indicates long-term stable policy towards adoption of EVs, Subrata Roy, senior group vice president at ICRA told BloombergQuint, adding that the support to EV charging infrastructure and bringing down ownership costs would be critical to wider adoption of electric vehicles.

The move, according to experts, may also bring down prices of electric vehicles. “Given the limited manufacturing base in India and evolving battery technology, incentivising the manufacturing ecosystem is vital to optimise costs,” P Pranavant, partner at Deloitte India said, adding that this would ultimately cascade towards reduced EV prices.