As part of the second phase of FAME 2 scheme, special incentives will be lined up for local manufacturing of critical components for electric vehicles. (Reuters)
As part of the second phase of FAME 2 scheme, special incentives will be lined up for local manufacturing of critical components for electric vehicles. (Reuters)

10,000-crore India EV policy seen as the spark the industry needs

  • The second phase of FAME 2 scheme is expected to support more than 150,000 electric vehicles in the next three years
  • The EV policy is seen as holistic, in a way that it lays emphasis on critical factors: lithium-ion batteries and charging stations

New Delhi: The announcement of the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-2) scheme on Thursday, with an outlay of 10,000 crore for a period of three years, has been welcomed by automakers that were waiting for a signal before committing huge investments in electric mobility.

Government support for FAME-2 is holistic and includes a focus on the charging infrastructure and Make in India, said Pawan Goenka, managing director at Mahindra and Mahindra Ltd. “The new outlay of 10,000 crore over a period of three years provides a stable policy to promote green mobility in India," said Goenka.

“It addresses key issues, including national energy security, mitigation of the adverse impact of vehicles on the environment and growth of domestic technology and manufacturing capabilities. The revised Fame 2 removes all the uncertainty and will put electric vehicles in the fast lane," he said.

Mahindra is the largest manufacturer of electric vehicles in India and has already set up a base on the outskirts of Bengaluru to manufacture electric powertrains. The company will also set up a lithium ion battery manufacturing plant in Maharashtra with South Korean company LG Chem.

The union government is expected to support more than 150,000 units of electric vehicles cutting across segments in the next three years. As many as one million electric two-wheelers, 500,000 three-wheelers, 55,000 two-wheelers and 7,000 buses will be included in the new phase of the scheme.

Also read: Soon, you can charge your electric car at homes, offices

The FAME 2 scheme should have been designed for a period of five to seven years and should not have included hybrid vehicles, said to Ravneet Phokela, chief business officer, Ather Energy, an electric scooter startup backed by Hero MotoCorp Ltd.

Also read: India’s electric vehicle goals being realised on two wheels, not four

“The proposal to use battery capacity as a proxy for performance and linking it to the subsidy is a decisive step to incentivize EVs that are near-equal or better in performance to their petrol counterparts," said Phokela.

“Offering incentives to all OEMs to invest in setting up a charging network and also simplifying the requirements of a station and the process of installation and operation will be an added push in the right directions," he said.

Also read: Govt officials refuse to use electric cars made by Mahindra, Tata Motors

As part of the scheme, special incentives will be lined up for local manufacturing of critical components for electric vehicles, especially the lithium ion batteries. The government has made clear its intention to promote electric mobility through commercial fleet owners and incentives will be offered only to them.

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