Electric, Hybrid Vehicles to get cheaper: Rs 1.5 lakh to 3 crore rebate to be announced under FAME II

The government has also decided not to specify any type of technology for providing support under the scheme with "all zero emission vehicles (ZEV), including fuel cell electric vehicles (FCEV), envisaged to be supported".

By: | Updated: March 26, 2018 5:55 PM


To promote the use of cleaner and greener vehicles, Government if India is likely to extend a financial support of Rs 8,730 crore under Faster Adoption and Manufacturing of (Hybrid &) Electric (FAME) scheme in India. The new financial support will be valid for five years but will be restricted to new energy vehicles like hybrids and electric vehicles used for public transport, commercial purposes, and two-wheelers. Ministry of Heavy Industries has laid a road-map for this scheme and claims it to be a 'technology agnostic' approach. Reports also suggest that only advanced batteries will be promoted in Phase II of the FAME scheme.

Second innings of FAME scheme was expected to be implemented starting April 1, 2020. But as usual delays in the workings of Government, it has been delayed. The proposals entailing financial support to the tune of Rs 8,730 crore are likely to sent to the Union Cabinet for approval soon, an official said. Further, the fund supports include Rs 2,500 crore for buses, Rs 1,000 crore for four-wheelers, Rs 600 crore for two-wheelers and Rs 750 crore for three-wheelers.

Ministry of Heavy Industry has submitted this new plan to government-appointed Niti Aayog which is responsible to see the workings of implementation of electric vehicles in India. Niti Aayog has begun the process of collating inputs from various ministries involved including Power, Road Transport & Highways, Finance Ministry and GST Council.

The phase one or pilot phase of the scheme was to expire on March 31 and is likely to be extended by few more months, another official added.

Out of the Rs 8,730 crore, support to the tune of Rs 5,550 crore has been proposed as demand-side incentives during the second phase of the scheme spanning five years, said sources.

This also to a certain extent makes it clear that the Government's focus towards electric mobility first is at public transport and commercial vehicles. "Support under FAME II, will be extended exclusively to public transport and/or commercial transport. However, two-wheeler segment with a maximum speed greater than 25 km/h will continue to be supported for all users." a senior government official informed PTI.

The proposal also seeks to link incentives to the increasing demand for electric vehicles and their localization level to promote 'Make in India' programme. "It is proposed to begin with 50 per cent localization; to be increased to 60 per cent by second year and 70 per cent thereafter. Proportionate reduction in incentives by 10 per cent each year after Year 2 is envisaged," the official added.

The government has also decided not to specify any type of technology for providing support under the scheme with "all zero emission vehicles (ZEV), including fuel cell electric vehicles (FCEV), envisaged to be supported".

"The proposed scheme is also intended to support hybrid and plug-in hybrid vehicles to build volume of EV components which are similar for electric and hybrid vehicles," the official said, adding, however, stringent norms based on optimal energy saving as per market viability would be defined for strong hybrid vehicles. It's like that Government will prevent premium automakers to take advantage of FAME scheme and will restrict these incentives to vehicles with Ex-Factory prices, lower than a particular threshold value. So most of the imported vehicles (CBU) will not be benefited under this scheme.

Incentives on ex-factory prices range from Rs 1.5 lakh for high-speed two-wheelers to Rs 3 crore for buses, while for four-wheelers, including strong hybrid and plug-in hybrid, it is capped at Rs 15 lakh. For heavy-duty trucks, the factory price has been capped at Rs 2 crore and for LCVs it is Rs 10 lakh.

These incentives proposed are in proportion to the fuel efficiency that will be verified by ARAI. Under the FAME II, the ministry has also proposed that in cases where vehicles are sold without batteries for any fleet of 50 vehicles and above, operators can claim incentives for the purchase of bulk batteries.

On the infrastructure front, under FAME II, the Government of India plans to set up a network of charging stations in all metros, cities with million plus population and smart cities. The Heavy Industry Ministry had estimated an overall requirement of Rs 14,000 crore to support this infrastructure.

With inputs from PTI

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