Budget 2024: FAME allocation cut won’t spoil EV growth story, says Raptee Energy’s Jayapradeep Vasudevan
Budget 2024: The allocation under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles scheme, while reduced from the consumer perspective, still carries the potential to stimulate demand, Raptee Energy CBO Jayapradeep Vasudevan told Mint.
Budget 2024: The highly anticipated announcement of Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme's third phase wasn't forthcoming in the Interim Budget 2024 presented by Finance Minister Nirmala Sitharaman on February 1. And to the EV industry's dismay, the existing FAME scheme also saw a massive 55.58% cut in allocation. Budgetary support plunged from ₹4,807.40 crore to ₹2,671.33 crore for the upcoming financial year, falling significantly short of expectations for a hike to ₹10,000-12,000 crore.
While the significant reduction in FAME subsidies is a major concern, it would not have any negative impact on the demand for EVs, Raptee Energy CBO Jayapradeep Vasudevan told Livemint in an exclusive interview.
The unexpected reduction starkly contrasts with earlier assumptions of an increase in the FAME scheme budget to approximately ₹10,000-12,000 crore for FY25. The lack of details on how the government plans to allocate funds for various segments under the FAME scheme in the new financial year raises uncertainties. Notably, the government had hinted earlier at a potential decrease in the allocation of electric vehicles for personal use, including electric two-wheelers, under FAME.
“The focus on expanding the public charging network will significantly boost the confidence of all segments of the EV industry and will break the ‘Range Anxiety’ which is the biggest barrier for EV adoption in India,” Vasudevan pointed out.
Edited Excerpts:
1. How do you view the recent government announcements impacting the EV market in India?
In light of recent government announcements impacting the electric vehicle (EV) market in India, there is a discernible and commendable emphasis on fostering a long-term transformation and adoption of EVs. The strategic focus on supporting manufacturing and expanding the infrastructure for public charging stations stands out, as these are the two pivotal pillars for the widespread adoption of electric vehicles, reflecting a robust and well-rounded approach.
The recent allocation under the FAME) scheme, while reduced from the consumer perspective, still carries the potential to stimulate demand, particularly in the entry-level 2-wheeler segment. This allocation is anticipated to play a crucial role in propelling the adoption of electric vehicles, laying a foundation for sustainable growth.
Moreover, the heightened visibility and support for electric 3-wheelers (e3w), electric 4-wheelers (e4w), and government-owned electric buses underscore the government's steadfast commitment to spearheading the transformation towards cleaner and more sustainable transportation. By focusing on these key segments, the government aims to accelerate the overall adoption of electric vehicles, contributing significantly to the evolution of the Indian automotive landscape.
2. Are there any glaring omissions or missed opportunities in the budget regarding EVs?
In assessing the recent budget's implications for electric vehicles, one notable aspect deserving of attention pertains to battery and cell manufacturing. A more pronounced emphasis on incentives, support packages, and additional benefits could have served as a catalyst for nurturing indigenous capabilities in battery production within India. Recognising that batteries constitute the most significant cost component for any EV, further encouragement in this domain could have fostered an environment conducive to innovation and self-reliance, aligning with the broader objectives of the government's push towards electric mobility.
3. How will the PLI scheme for EVs impact Raptee Energy's manufacturing plans and investment strategies?
As we are in the nascent stages of manufacturing setup and investment in the EV sector, the recently introduced production-linked incentive (PLI) scheme emerges as a pivotal consideration. At this juncture, our approach is characterised by a commitment to study and closely observe the intricacies of the PLI scheme. By doing so, we aim to position ourselves strategically to fulfil the eligibility criteria laid out under the scheme.
4. Are the existing FAME subsidies still relevant in light of the new budget announcements?
The existing subsidies under the FAME programme remain pertinent in the current scenario, given that the government has already allocated funds for these initiatives. However, it is noteworthy that the new budget announcements indicate a potential reduction in the FAME subsidy on a per-vehicle basis, it is important to take into account the anticipated growth in volume against a backdrop of reduced allocation.
Despite the reduction, the ongoing FAME subsidies will continue to play a crucial role in providing substantial support, particularly in stimulating demand within the entry-level category of electric 2-wheelers (e2w). The continued relevance of these subsidies underscores the government's commitment to fostering the adoption of electric vehicles.
5. How will the budget impact various segments of the EV market, such as two-wheelers, three-wheelers, and passenger cars?
The budgetary provisions aimed at supporting EV manufacturing are poised to have a positive impact across various segments of the EV market. This comprehensive support is expected to serve as a catalyst for growth, benefiting all segments within the electric mobility landscape.
The focus on expanding the public charging network will significantly boost the confidence of all segments of the EV industry and will break the ‘Range Anxiety’ which is the biggest barrier for EV adoption in India.
Notably, the FAME subsidy, with a specific focus on electric 2-wheelers (e2w), is anticipated to play a pivotal role. Given the substantial volume occupied by e2w in the market, fostering adoption in this segment becomes imperative for the overall success and proliferation of EVs.
Furthermore, the budget's influence extends to other segments, including electric 3-wheelers (e3w) and passenger cars. Increased adoption in these segments is poised to instil greater confidence in the market, acting as a validating factor for businesses and consumers contemplating the shift to electric vehicles. The interconnected growth across these segments reflects a holistic approach to advancing the EV market.
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Business NewsAuto NewsBudget 2024: FAME allocation cut won’t spoil EV growth story, says Raptee Energy’s Jayapradeep Vasudevan
First Published:2 Feb 2024, 04:34 PM IST
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