Revised FAME II: How it will support the EV ecosystem in India

The recent changes in FAME II subsidies are expected to drive growth of the Indian electric vehicle market

Changes to FAME II will help the EV market

Considering the impact of the increasing air pollution on the health of citizens and that of the rising crude oil import bill on the economy, the Indian government is taking steps to improve the environment and build a sustainable future. One such step is the introduction of the FAME II scheme, or Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India.

FAME II benefits for manufacturers and customers

The FAME II scheme provides direct financial benefits to both electric vehicle (EV) manufacturers and customers of such vehicles (customers get EVs at a reduced cost, making these more cost-effective than conventional fuel vehicles). Simultaneously, Original Equipment Manufacturers (OEMs) can claim the subsidy amount by the Department of Heavy Industries (DHI) after first utilising it to benefit end-customers in the form of reduced purchasing price.
In addition, FAME II has a broader perspective than prior EV policies, along with two primary verticals to stimulate the EV space. The first is demand incentives, followed by the creation of a comprehensive charging station network. Specifically for electric two-wheelers, the increased subsidy under FAME II is estimated to bring down the purchasing cost by 10% to 25%. This number is subject to varied costs of vehicles, battery capacity and additional features.
The recent amendments in the FAME II scheme have indicated that the central government is planning to appoint Energy Efficiency Services Ltd (ESSL) as an aggregator for fulfilling the demands of electric three-wheelers and electric buses. This boost in demand and supply of EVs will immensely benefit the EV segment in the near future.

Moving Forward

Considering the increasing demand for sustainable solutions, it is unsurprising to witness evolving government policies and public temperament favouring greener and ecologically sound transportation alternatives. Moreover, on the back of the FAME II subsidiary scheme started by the Indian government, both the Indian EV industry and the general public will be able to avail numerous economic and ecological benefits.
Apart from the evident environmental benefits, the government is keen on encouraging the EV market to also support the commuting issues of the general public. Given the relatively cost-effective recharging requirements of EVs, it doesn’t burn a hole in people’s pockets either, like petrol and diesel do especially after the prices of these fuels reaching an all-time high.
After the implementation of FAME II subsidies, it is clear that the Indian government is serious about the growth of the overall EV market. Taking cognisance of the growing EV trend and sustainable development drive, the sector is likely to thrive in the near future.

Author: Hemant Bhatt

Disclaimer: The author is CEO & founder, Prevail Electric, the electric two-wheeler start-up. Views are personal

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First published on: 09-08-2021 at 08:54 IST