The adoption of electric vehicles in India could get an adrenaline boost, if the government accepts recommendation of the Departlment-led Parliamentary Standing Committee on Industry headed by MP, Dr. K Keshava Rao.
In the recommendation released yesterday the committee has made a slew of suggestions to the government to drive adoption and supportive ecosystem for electric vehicles in India. As part of the document released, the committee states that the Ministry should broaden the scope and extend the FAME 2 scheme for at least 3 more years in consultations with industry stakeholders to make the scheme more inclusive.
It is interesting to note that the FAME 2 scheme with an budget outlay of Rs 10,000 crore was introduced in 2019 for a period of three years, targetting to supporting 7,000 e-buses, 5 lakh e-3 Wheelers, 55,000 e-passenger cars and 10 lakh e-two wheelers. Of this a total of 12,16,380 vehicles have been subsidised till now with an expenditure of Rs 5,422 crore (as of December 21, 2023).
While at present, electric four-wheelers for fleet operators are currently eligible for FAME 2 subsidy, it suggests to include private electric cars based on the cost and battery capacity. Electric two-wheelers which make up for the bulk of EV sales numbers is suggested to have increased budgetary allocation to maintain the sales momentum and achieved the desired target by 2030.
Public transportation & ecosystem
Electrification in the nascent quadricycle category is also part of the subsidy suggestion as it would not only help decongest roads, reduce pollution but also generate employment. The electric bus segment which has been garnering support by the central and many state governments through various policies, has also been suggested to be allocated more funds under FAME 2 scheme so the adoption does not suffer due to shortage of funds.
The Committee has recommended the Ministry to foster international cooperation/partnership between countries and global suppliers to boost supply chain requirements of the domestic EV industry. The current set up of 7,432 EV charging stations has been found way below the ambitious target of 22,000 EV charging stations.
The reports suggests “sincere efforts should be made for setting up more charging stations. The committee is of the view that the proposal of stakeholders hold merit and recommends that the Ministry of Heavy Industries in consultation with Industry partners should expand the scope of FAME 2 or any future scheme to incentivise installation of charging stations to individual investors in order to achieve the goal of setting up of charging stations throughout the length and breadth of the country as well as to eliminate road anxiety among potential customers.”
EV batteries and recycling
The committe has suggested to bring down the GST on lithium-ion batteries further brought to bring the EV ownership cost. Furthermore, initiatives should be taken to encourage advanced R&D efforts for development of sustainable e-waste and recycling; encourage development sodium-ion chemistry as an alternative to lithium-ion in battery manufacturing in coordination with the OEMs and channel partners for a more sustainable future.
Logistics sector should be further encouraged to decarbonise the transport sector and could also be asked to mandate electric vehicles in their fleet. E-commerce start-ups especially for their two-wheeler fleet should be asked to adopt electric vehicles only.
Lastly, EV financing should be given priority sector lending status till the ambitious target of 30 percent penetration by 2030 is achieved.
