Government bullish on electric vehicles in India but silent on FAME II incentives

Indian government currently offers a range of incentives from Rs 1700 on two-wheelers to up to Rs 55 lakh on electric buses. The existing FAME scheme was extended by six months in April 2018 and there is no word on FAME II as of now.

By: | Updated: July 25, 2018 12:08 PM
Electric vehicles in India, EVs in India Electric vehicles in India

Two days after the GST council reduced the cost of electric car battery from existing 28% to 18%, the Indian government has confirmed that the second phase of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles scheme also known as the FAME India scheme will be announced soon and will give a big boost to the Indian EV industry with heavy incentives likely on R&D and interventions on the demand and supply side.

A PTI report confirms that Babul Supriyo, Minister of State of Heavy Industries and Public Enterprises has said that the Indian automotive industry needs to develop lithium-ion battery technologies and electric motors for automotive applications and battery management systems. "The need for innovative technology is assuming great importance due to rapidly changing product technologies in the automotive industry, depleting fossil fuel resources, high import cost of fuel, issues of environmental degradation and climate change," Supriyo said.

He also acknowledged the fact that switching from the conventional internal combustion engine to new technologies including electric and hybrids is essential. The FAME scheme was first rolled out in 2013 as a part of National Mission on Electric mobility that aimed at developing new technologies in India and promote the use of electric mobility in India. The existing FAME scheme was renewed for six months in April 2018 which delayed the rollout of FAME II. FAME II is reportedly the advanced version of government's strong focus to promote the use of electric and hybrid vehicles in the country. This is also the third time in two years, that government has extended the current scheme.

In the second round, Government plans to invest about Rs 9,000 crore for the next five years to boost EVs and hybrid vehicles in India. It is expected that the government will look to electrify public transportation and two-wheelers first before extending the incentives to private electric cars.

Currently, the FAME scheme offers electric scooters incentives ranging between Rs 1700 to Rs 39,000, three-wheelers incentives range from Rs 3300 and Rs 61,000. Electric and hybrid cars are also given a benefit from Rs 11,500 to Rs 1.43 lakh. Electric buses cost about Rs 55 lakh less under the FAME scheme.

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