E-vehicle manufacturers asked to indigenise components to avail FAME 2 incentives

  • The scheme is part of the government's increased thrust to boost electric mobility through greater indigenization
  • The scheme has an outlay of 10,000 crore till 2022 for the phase 2

Electric and hybrid vehicle (xEVs) manufacturers will have to indigenise a significant portion of components to avail benefits under a revised set of rules of the phase 2 of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles, or FAME 2 scheme. In a first, detailed localization draft guidelines have been issued by the Department of Heavy Industry (DHI) putting out a list of key components for xEV manufacturers to localise with respective deadlines to avail the scheme across all approved vehicle categories.

The latest set of draft guidelines were reviewed by Mint.

DHI, which is the government nodal agency for FAME, has listed components used in the xEVs across vehicle categories including electric two-wheelers, electric three-wheelers and e-rickshaws, four-wheelers and electric buses (eBuses). It also charts out the associated deadlines as the effective date of indigenization of each of these parts. For instance, the electric vehicle manufacturers across the above-mentioned categories will have to localize manufacturing of wheel rims integrated with hub motor from 1 October 2019. Similarly, the HVAC units (heating, ventilation and air conditioning) for electric cars are also scheduled for indigenization from the same date.

Other key components such as electronic throttle, vehicle control unit along with the onboard charger for all approved vehicle categories, and electric compressor and the DC charging inlet, both for the electric cars and buses are aimed for indigenization from 1 October 2020.

The first phase of Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles Scheme or the FAME scheme was introduced on 1 April 2015, while the second phase was notified in March earlier this year, and has been under implementation April onwards.

The scheme is part of the government's increased thrust to boost electric mobility through greater indigenization and has an outlay of 10,000 crore till 2022 for the phase 2. Of that, while 8,596 crore were allocated to the demand incentives for the xEVs, funds worth 1,000 crore were earmarked for rolling out the EV charging infrastructure, both split over a period of three years: FY20, FY21 and FY22.

Despite the localization push, the import of key battery components was, however, kept in the subsidy umbrella to overcome immediate technological challenges and manage costs. The import of lithium ion cells and battery packs are charged with a basic 5% import duty. This tariff is slated to go higher to 10% and 15%, respectively, from April 2021 onwards with an intent to drive battery suppliers to localize the technology in India, a DHI document dated 6 March 2019 stated.

The new draft rules notifies the vehicle testing agencies to ensure strict compliance of phased manufacturing program (PMP) before issuing the eligibility certificate to the xEV manufacturers for facilitating registration of their vehicles under phase-II of Fame India scheme. The demand incentive, under FAME 2, is based on the battery capacity wherein energy content is measured in kilowatt-hour (kWh). Initial proposal extends a uniform demand incentive of 10,000 per kWh for all EVs including hybrids except buses.

DHI has, meanwhile, invited applications from the xEV manufacturers for registration to comply with the incentive eligibility criteria under FAME 2 scheme.