New Delhi: The government has announced an outlay of ₹10,000 crore for Phase 2 of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles, or FAME 2 scheme, to boost electric mobility and increase the number of electric vehicles in commercial fleets. Mint takes a look at the FAME 2 scheme and what it means for electric vehicles as well as the auto industry in India.
What are the salient features of FAME 2 scheme?
The outlay of ₹10,000 crore has been made for three years till 2022 for FAME 2 scheme. The centre has sanctioned ₹8,596 crore for incentives, of which ₹1,000 crore has been earmarked for setting up charging stations for electric vehicles in India. The government will offer the incentives for electric buses, three-wheelers and four-wheelers to be used for commercial purposes. Plug-in hybrid vehicles and those with a sizeable lithium-ion battery and electric motor will also be included in the scheme and fiscal support offered depending on the size of the battery.
How will FAME 2 scheme help improve charging infrastructure?
The centre will invest in setting up charging stations, with the active participation of public sector units and private players. It has also been proposed to provide one slow-charging unit for every electric bus and one fast-charging station for 10 electric buses. Projects for charging infrastructure will include those needed to extend electrification for running vehicles such as pantograph charging and flash charging, says a notification by the heavy industries ministry. FAME 2 will also encourage interlinking of renewable energy sources with charging infrastructure.
What is the target?
The centre may incentivize the purchase of 7,090 electric buses with an outlay of ₹3,545 crore, 20,000 hybrids with ₹26 crore, 35,000 four-wheelers with ₹525 crore and 500,000 three-wheelers with ₹2,500 crore.
How will the incentives be offered?
The centre plans to roll out an incentive of ₹10,000 per kilowatt (kW) for two-, three- and four-wheelers, based on the size of their batteries. To encourage state transport units (STUs) to buy more electric buses, ₹20,000 per kW will be offered as incentive. The incentives may further be subject to bidding by original equipment manufacturers. A committee will review the incentives after a certain period. Electric buses will be offered incentives on the basis of the operational expenditure model adopted by STUs.
What steps are being taken to make electric vehicles more affordable?
FAME 2 will offer incentives to manufacturers, who invest in developing electric vehicles and its components, including lithium-ion batteries and electric motors. The centre has asked states to frame their EV policy and provide additional fiscal and non-fiscal incentives to manufacturers and buyers. Only buses priced up to ₹2 crore, strong and plug-in hybrids under ₹15 lakh, three-wheelers under ₹5 lakh and two-wheelers under ₹1.5 lakh will be eligible for incentives.