FAME 2: To provide impetus to the adoption of electric vehicles through upfront incentives, Deloitte India
The second phase of the FAME scheme has been announced wherein a budget of Rs 10,000 crore will be implemented in three years (2019-2022). This initiative is being seen as a major boost to the electric vehicle (EV) segment in India which is still at a nascent stage. In addition to commercial vehicles, public transport STUs, the FAME 2 scheme will also be offering subsidy on electric two-wheelers from April 1, 2019. Below is the official quote from P. Pranavant, Partner, Deloitte India on new FAME announcement.
Electric Vehicles (EVs) have gained significant traction over the years leading to green mobility in India. To accelerate adoption of EVs, stakeholders aspired for Government support through policy interventions and incentives. The Faster Adoption and Manufacturing of Electric Vehicles (FAME) is one of the key initiatives to enhance stakeholder confidence in this sector. While FAME-I came into effect in April 2015, initially for a period of two years, it was extended till 31 March 2019 or notification of FAME-II, whichever is earlier. FAME-II has thus been long awaited and this is a welcome initiative to provide impetus to the adoption of electric vehicles through upfront incentives on purchases across vehicle categories and support the widespread availability of charging infrastructure. FAME-II has also enabled substantial increase in outlay vis-à-vis its predecessor (FAME I), and is in line with increased thrust on electrifying public transportation, that includes shared transport, covering buses as well as 3W and 4W segments used for public transport.
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Further given the limited manufacturing base in India and evolving battery technology, incentivising/ strengthening the manufacturing ecosystem is vital to optimize manufacturing costs which would ultimately cascade towards reduced EV prices. The scheme thus could be made more holistic with supply side interventions as well. Also, the provision on incentivising operational expenditure requires more clarity.
Notwithstanding above, the scheme sets a preface to a clean transformation of the transport sector and enables mainstreaming of EVs in India, particularly in public transportation system. This will promote environmental sustainability and reduce congestion, and also encourage innovation and advancement in battery technology.
Team OD | 22 Aug 2019
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