Government reduced subsidy on EVs

 

Latest Context:

Recently, the Government of India reduced the subsidy on Electric Vehicles (EVs) given under the FAME II (Faster Adoption of Manufacturing of Electric Vehicles).

About the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) Scheme

• It’s an initiative launched by the Indian government to promote the adoption of electric and hybrid vehicles in the country.
• The scheme was launched in 2015 and has undergone multiple phases.
• The objective of the FAME scheme is to reduce pollution, encourage the use of electric and hybrid vehicles, and establish India as a manufacturing hub for such vehicles and their components.
• The scheme is implemented by the Ministry of Heavy Industries.
• Initially, FAME- Phase I was approved for a period of 2 years starting from 2015 with a total budget allocation of Rs. 895 crores.
• The Scheme got extended from time to time, with the last extension done for a period up to 31st March 2019.
• Then, government approved Phase-II of FAME scheme with the budget allocation of Rs. 10,000 cr. for a period of 3 years starting from 1st April 2019.
• Now, FAME Phase II has been extended till 2024.
• Objective of the scheme is to reach the goal of 30% electric vehicles by 2030.

Key features of FAME Phase II scheme are:

• Financial Incentives: FAME II provides financial incentives to promote the adoption of electric vehicles (EVs) in India. The incentives are offered to buyers of electric two-wheelers, three-wheelers, and four-wheelers. The amount of incentive varies based on the type and capacity of the vehicle. These incentives aim to reduce the upfront cost of EVs and make them more affordable for consumers.
• Focus on Electric Two-Wheelers and Three-Wheelers: FAME II gives significant emphasis to the promotion of electric two-wheelers and three-wheelers. These segments are considered vital for last-mile connectivity, shared mobility, and public transportation. Higher incentives are provided for electric two-wheelers and three-wheelers to encourage their adoption in urban and semi-urban areas.
• Charging Infrastructure: FAME II emphasizes the development of robust charging infrastructure for electric vehicles. It supports the establishment of public charging stations in cities, highways, and other suitable locations. The scheme provides financial assistance for the procurement and installation of charging infrastructure, which is crucial for addressing the range issue associated with electric vehicles.
• Indigenous Technology Development and Manufacturing: FAME II encourages the development of indigenous technology and manufacturing capabilities in the electric mobility sector. It promotes domestic manufacturing of electric vehicle components and systems, such as lithium-ion batteries and electric drivetrains. The scheme aims to reduce dependence on imports and boost local manufacturing and employment opportunities.
• Focus on Shared Mobility and Public Transportation: FAME II encourages the adoption of electric vehicles in shared mobility services and public transportation. Incentives are provided for electric buses and electric taxis to promote their usage in public transport fleets. These initiatives aim to reduce emissions from high-volume transportation and promote sustainable mobility solutions.

a) Presently, aim is to support10 lakh e-2W (electric – 2-Wheeler), 5 Lakhs e-3W, 55000 4Ws and   7000 Buses.

b) Recently, the Government of India has put a cap on incentives for electric two-wheelers and now it will be 15% of the ex-factory price of vehicles from 40%at present.

• Applicability: Vehicles that are fitted with advanced chemistry battery, meeting with minimum technical criteria and are registered as motor vehicle will be eligible for the incentive under the scheme.

 

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