FAME II Scheme Amendments: The right push for India’s EV industry

In addition to the subsidy is also the soaring fuel prices along with the low maintenance cost of an EV that will motivate a potential customer to opt for a sustainable alternative.

July 2, 2021 4:38 PM

As a part of promoting EV adoption and manufacturing in the country, the Government recently announced the revised FAME 2 subsidy. The FAME 2 scheme announced back in 2019 did lay out guidelines for EVs that could be eligible to qualify for the subsidy. The recent amendment in the scheme has extended the subsidy amount for the EVs that had met the previous eligibility criteria.

This revision has certainly electrified the EV industry in the country as the scheme has been extended to 2024. While such a push is imperative for faster green vehicle adoption, a more significant reason that is obstructing the adoption is the limited choice available to a customer. Undoubtedly, companies are coming up with new eclectic two-wheelers and larger OEMs also playing a vital role in electric PVs. The ratio of choice given to, making the shift slower.

Industry growth post FAME 2

As per the Department of Heavy Industry, National Automotive Board (source link: https://fame2.heavyindustry.gov.in/), the number of EVs sold under vehicles under FAME 2 as of today are 78000+. For a developing country like ours, this is still a small number when compared to the fuel vehicles sold on an annual basis or even monthly per se.

Although the EV industry is at a nascent stage in the country, the shift to green mobility will be inevitable in years to come. Such a shift will be steady with Government support, policies like FAME 2, etc but the bottom line is still the manufacturing of an EV that could be the next best alternative to a petrol or diesel vehicle. Reverse engineering could turn out to be the best solution going forward that would also help in addressing the major pain points like range anxiety, charging infrastructure, and affordability.

The state governments like Delhi and Gujrat have been taking measures to help in the faster EV adoption. This will also imply the other states follow the same. With further incentives, the customers will find it easier to switch to electric vehicles.

Price cuts in the EVs

The benefit that any customer would get is truly in the form of price cuts. With the revision in the scheme coming into place, the demand for electric vehicles would surge, thereby cutting the vehicle built-up cost, also improving the unit economics. In addition to the subsidy is also the soaring fuel prices along with the low maintenance cost of an EV that will motivate a potential customer to opt for sustainable alternative.

Issue of charging infrastructure

A key area that would need attention is the charging infrastructure. The government has also announced that commercial public EV charging stations for two-, three- and four-wheelers will be eligible for 25 percent capital subsidy on equipment/machinery (limited up to Rs 10 lakh per station) for the first 250 commercial public EV charging stations.

While schemes such as FAME 2 will focus on the adoption of an EV but we will need to be facilitated with adequate support for the charging infrastructure deployment too. The collaborative role of the Government and the private players in the industry will help in mitigating the issue.

Conclusion

With the growing interest in this segment and the overall growth of the industry, EV will steal the limelight in years to come. EVs are indeed the future, and the amendment to the FAME 2 scheme is a phenomenal move. The Indian EV industry would see more traction when such subsidies are coupled with infrastructural development, thus contributing to incremental progress.

Author: Suhas Rajkumar, Founder, and CEO of Simple Energy

Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.

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