Taxis and buses in focus under revamped scheme for electric vehicles

Updated: February 26, 2019 5:41:54 AM

For taxis, the subsidy could be between Rs 1.7 lakh to Rs 2.5 lakh for vehicles with battery capacity in the range of 17 KwH-25 KwH and priced between Rs 8.5-14 lakh.

With en eye on demand creation, buyers of EVs will be given an upfront reduction in price by the dealer at the time of purchase. (Representational photo)

By Prasanta Sahu & Pritish Raj

Keen to curb oil imports and regulate fossil fuel emissions, the Centre has firmed up a plan to increase the subsidy on electric vehicles (EVs) manifold, with a greater focus on taxis and buses used for public transport. As the Cabinet is likely to approve a Rs 10,000-crore package for 4-5 years under the second phase of the Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME-2) scheme, up to 18% of the price of the electric taxis will be borne by the government compared with under 10% now. Also buses run on electricity will likely get a higher quantum of government support than taxis and two-wheelers.

Compared with FAME-1 for which subsidy of Rs 900 crore has been allocated in the four years to FY19-end (only two thirds of this has been spent so far), the scheme’s second phase will see near ten-fold jump in outlay.
The FAME-2 budget initially planned by the ministry of heavy industry earlier was Rs 5,500 crore and this was subsequently hiked, people privy to the discussions in the government told FE.

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With en eye on demand creation, buyers of EVs will be given an upfront reduction in price by the dealer at the time of purchase. On a two-wheeler with battery capacity of 1KwH, for instance, the subsidy could be Rs 10,000.

A 1-1.5kw two-wheeler is currently priced in the range of Rs 75,000 to Rs 1.10 lakh. For taxis, the subsidy could be between Rs 1.7 lakh to Rs 2.5 lakh for vehicles with battery capacity in the range of 17 KwH-25 KwH and priced between Rs 8.5-14 lakh. The formula for subsidising buses would be different, the sources said, without elaborating.

Under FAME-1, incentives of up to Rs 22,000 are being given for two-wheelers and up to Rs 1.3 lakh for cars, depending upon the battery capacity.

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The second phase of the scheme will also cover construction of charging infrastructure and offer other incentives such as zero registration fee and road tax waiver as well as free parking for various categories of EVs, the sources said. The government aims to have around 1,000 charging stations initially and more subsidy for construction will expedite the process, in what could create the e-mobility ecosystem for the consumers and the fleet operators.

The move will give a boost to the manufacturers and spur EV volumes, which currently stands at less than 1% of the total vehicles sold in India as lack of charging infrastructure has been a dampener.

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The second phase of the FAME scheme was earlier slated for a roll-out in October 2018 but got stuck after the PMO intervened to bolster it and give maximum incentives possible for local manufacturing of lithium-ion batteries.

Since inception of FAME-1 till December 6, 2018, the government has given financial support to 2,61,507 electric/hybrid vehicles. About 119 models of vehicles of 27 OEMs got registered under FAME-India Scheme for availing demand incentive. During fiscal 2017-18, electric two-wheeler sales more than doubled to over 54,000 units from a year ago, while electric car sales fell to 1,200 from 2,000 over the same period, data from the Society of Manufacturers of Electric Vehicles (SMEV) showed.

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