FASTER ADOPTION & MANUFACTURING OF ELECTRIC VEHICLES (FAME)

FASTER ADOPTION & MANUFACTURING OF ELECTRIC VEHICLES (FAME)

The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme was launched under the National Electric Mobility Mission, to encourage electric and hybrid vehicle purchase by providing subsidies.

WHAT IS THE ISSUE?

The government is slashing subsidies for the electric 2-wheelers segment – a regressive step which will drag India’s EV revolution.

WHAT IS NATIONAL ELECTRIC MOBILITY MISSION?

• The Ministry of Heavy Industry launched the NEMMP 2020 in 2013.
• Targets:
  • Deploying 5 to 7 million EVs in the country by 2020.
  • Deploying 400,000 passenger battery electric cars (BEVs) by 2020 in order to avoid 120 million barrels of oil imports and 4 million tons of CO2 emissions.
  • Lowering of vehicular emissions by 1.3 to 1.5% by 2020.
  • Total investment required – INR 20,000 – 23,000 cr (approx 3 billion USD).

WHAT IS THE FAME INDIA SCHEME?

• A part of NEMPP, the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India (FAME India) scheme, has been administered by the Ministry of Heavy Industry since 1st April 2015.
• Under the scheme, subsidies are being given to promote manufacturing of electric and hybrid vehicle technology and to ensure sustainable growth of the same.
• Subsidies are meant to bring a price parity between vehicles that have electric motors and fossil fuel-run engines, thereby nudging buyers to go for the cleaner option.
• Its first phase – FAME I, ran for four years until 2019.
• Under the FAME II (which ends this financial year – March 2024), companies can offer a discount of up to 40% on the cost of locally manufactured vehicles and claim it as a subsidy from the government.
  • Under this scheme, the subsidies could range from ₹15,000-60,000 for a two-wheeler.

THE STATISTICS WRT ELECTRIC VEHICLES:

• The share of EVs in total vehicle sales in India is currently around 5%. Cumulative sales of EVs in India crossed the 1 million milestone for the first time in 2022-23.
• 2-wheelers accounted for more than 60% of all EV sales with an increase of 183% over 2021-22. A major reason for the rise in electric two-wheeler sales is subsidies.

THE TARGETS:

The government target for EV sales by 2030 is 30% of private cars, 70% for commercial vehicles and 80% for two and three-wheelers.

THE CURRENT STEP BY THE GOVERNMENT:

• Under the FAME-II scheme, the government is increasing the outlay for 2-wheelers but cutting the subsidy per vehicle.
• The budgetary allocation for electric 2-wheelers has been enhanced to around Rs 3,500 crore from Rs 2,000 crore, but the subsidy per unit is being reduced to 15% of the ex-factory price from 40% at present.
• Earlier, the government had announced that since it was about to achieve the target of 1 million sales in four years, the subsidies may not continue

WHAT SHOULD BE THE WAY AHEAD?

• A gradual transition with sustained subsidies would have been ideal to ensure market growth and reach the international benchmark of 20% EV adoption.
• Production-Linked Incentive scheme in automobile and battery cells will help to bring enhanced investments and will bring down costs for manufacturers.
• The 2-wheeler makers are looking to tweak products and prices to stay competitive. For example, leading manufacturers have launched lower-spec variants by reducing features and size of batteries.