With the feedback from the heavy industry, our Government is making amends to the FAME-2 scheme for acceptance for Electric Vehicles In India. The scheme was made public in March’19 with a given budget of Rs 100 billion but has still not hit the desired mark due to the multiple challenges faced by the OEMs. The total incentive distributed so far stands only at Rs, 2.2 billion.
The government has declared phase-II of the FAME scheme with a budget of 10,000 crore INR for a period of 3 years which was commenced from April 2019. Out of the total budget, 86% of the fund is addressed for the Demand Incentive to create demand for the Electric Vehicle industry in our country. It aims to create demand by supporting 7000 E-buses, 5 lakh E-3W, 55000 E-4W including strong hybrids, and 10 lakh E-2W.
The government has declared phase-II of the FAME scheme with a budget of 10,000 crore INR for a period of 3 years which was commenced from April 2019. Out of the total budget, 86% of the fund is addressed for the Demand Incentive to create demand for the Electric Vehicle industry in our country. It aims to create demand by supporting 7000 E-buses, 5 lakh E-3W, 55000 E-4W including strong hybrids, and 10 lakh E-2W. Depending on the take-off of various categories of EVs, the numbers may differ due to the provisions as they were made for both inter as well as intra segment-wise fungibility with the addition of the creation of Charging Infrastructure will be supported under the scheme.
Automobiles with advanced chemical batteries meeting the minimum technical criteria and under the registration of “Motor Vehicles” as per the CMVR will be eligible for the incentive. Providing affordable and eco-friendly transportation to the masses is the motive and the scheme is applicable only to the vehicles used for public transport or those who registered for commercial purposes. Also, privately owned E-2W are also part of the scheme.
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The Ministry of Heavy Industries has now introduced partial amendments to the FAME II (Faster Adoption and Manufacturing of Electric Vehicles in India) scheme to help EV adoption in 2Ws, 3Ws, and Buses. Glorifying the latest amendments withinside the FAME-II policies using the Centre, stakeholders within the zone have stated that the move will significantly boom the demand for electric-powered motorcycles and scooters.
Amendments made to the FAME-II policy for Electric Vehicles In India have been deciphered as:
E-2Ws: With the maximum cap at 40% of the cost, the increase in demand incentive will be from Rs 10,000/ kWh to Rs 15,000/ kWh.
E-3Ws: The EESL will pop out with aggregate demand for 300,000 units for multiple user segments. This will lead the economies of scale towards the OEMs for bulk biding and a following discount on the cost. These details will be looked over by EESL for implementation.
E-Buses: Cities with over 4mn population like Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat, and Pune will be the target. The EESL will look over the details for implementation.
By reducing the total cost of ownership for 2Ws: TCO shows acquisition and running costs until the automobile is disposed of, calculated on a per km basis. As in line with our calculations, TCO for an ICE scooter i.e. a Honda Activa starts at Rs 5.7/km, at the same time as it’s far better for E-2W like Ather 450 Plus at Rs 7.2/km, assuming a month-to-month usage of 500kms. The TCO reduces to Rs 6.5/km with the additional incentive of Rs 5000/ kWh. In the case of month-to-month utilization of 700kms, TCO will now be similar, which needs to appeal to clients with better utilization, especially from the economic segment.
The central government might extend the scheme to promote electric mobility by 2 years i.e. till March 2024. The FAME scheme ran by DHI is in support of the extension. Its first phase which began in April 2015 and was extended till March 2019 and the second phase that began in April 2019 and will end in March 2022, is designed to carry out the electrification of public and shared transports and helping in the creation of the charging infrastructure. The marquee scheme shows the intentions of the government to reduce vehicular emissions and dependence on fossil fuels.
The budget of Rs 10,000 crores is allocated for 3 years i.e. till March 2022. For both the phases, the total expenditure was measured up to Rs 818 crores till this year’s March. The budget for the consecutive years till 2024 is 1893 crores, Rs 3775 crores, and Rs 3514 crores for which the total is Rs 9182 crores.
Our government target is to create a global hub for EV manufacture and has approved an Rs 18,100 crore production linked incentive scheme i.e. PLI to make advanced chemistry cell batteries to attract voluminous investments of Rs 45,000 crores.
