Home / News / India /  Centre may extend EV mobility scheme by 2 years till Mar 2024

NEW DELHI : The central government may extend its ambitious scheme to promote electric mobility by two years till 31 March 2024, two people aware of the deliberations said. The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (Fame) scheme is run by the department of heavy industries (DHI), which is in favour of such an extension.

The scheme’s first phase began on 1 April 2015, and was extended till 31 March 2019, and the second phase (Fame-2) that began on 1 April 2019 is to end on 31 March 2022. It is designed to support the electrification of public and shared transport, and help create charging infrastructure. The marquee scheme signals the government’s intent to reduce vehicular emissions and dependence on fossil fuel.

However, the scheme has failed to take off, with only 5%, or 492 crore, of the 10,000 crore allocated under its second phase spent till March, as reported by Mint on Friday. Money allocated under Fame-2 is to be spent to subsidize 500,000 electric three-wheelers, 1 million electric two-wheelers, 55,000 electric passenger vehicles and 7,090 electric buses.

Fame 2 is designed to support the electrification of public and shared transport, and help create charging infrastructure.
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Fame 2 is designed to support the electrification of public and shared transport, and help create charging infrastructure.

“A decision is expected shortly by the government on extending Fame-2 by two years," one of the two people cited above said on condition of anonymity.

“NITI Aayog has suggested the reworking the scheme’s second phase to help bring down the cost of electric vehicles (EVs) on par with those with internal combustion engines (ICE), leverage the benefit of aggregation, and achieve Fame-2 targets under the current allocation of 10,000 crore," said the second person cited above who also did not want to be named. EVs are costlier than traditional vehicles with ICEs.

The budgetary allocation of 10,000 crore is for three years to 31 March 2022. With the total expenditure for both phases of the Fame programme at 818 crore till March this year, the budget sought for 2021-22, 2022-23 and 2023-24 is 1,893 crore, 3,775 crore and 3,514 crore, respectively, bringing the total to 9,182 crore.

This comes against the backdrop of the ministry of heavy industries and public enterprises modifying the scheme’s second phase on Friday, by allotting the demand aggregation of electric three-wheeler and electric bus component to state-run Energy Efficiency Services Ltd (EESL), a joint venture of NTPC Ltd, Rural Electrification Corp. Ltd, Power Finance Corp. Ltd and Power Grid Corp. of India Ltd.

EESL’s unit, Convergence Energy Services Ltd (CESL), aims to supply 200,000 two-wheeled EVs and 300,000 three-wheeled EVs across India. It also plans to halve the cost of these vehicles through incentives offered under phase 2 of the Fame scheme, state government subsidies, support from EV makers and carbon credits that will be earned under the United Nations Clean Development Mechanism (CDM).

Queries mailed to the spokespersons of the ministry of heavy industries and public enterprises and government policy think tank NITI Aayog on Sunday remained unanswered.

The scheme has gained traction in some states.

“Currently, 12 states have EV policies (drafted and approved) while the Fame II scheme operates at the central level," consulting firm EY and lobby group Federation of Indian Chambers of Commerce and Industry said in a recent report.

The government aims to turn the country into a global hub for EV manufacture, and has approved a 18,100 crore production linked incentive (PLI) scheme to make advance chemistry cell battery to attract investments of 45,000 crore.

The ministry of heavy industries and public enterprises on Friday also increased the incentive for electric two-wheelers to 15,000 per KWh, and has capped the incentive component at 40% of the two-wheeler EV’s cost.

A corrigendum published in the central government’s Gazette of India on Friday showed the ministry of heavy industries and public enterprises modification to the Fame 2 scheme. “Aggregation will be the key method for bringing the upfront cost of 3W EV at an affordable level and at par with ICE 3-wheelers. EESL will aggregate demand for 300,000 Electric 3-wheelers for multiple user segments. Details will be worked out by EESL for implementation," the gazette notification said.

Till March this year, only 2.4%, or 12,129, of targeted electric three-wheelers and 4.3%, or 43,184, of targeted electric two-wheelers had received subsidies under Fame 2. Also, of the 7,090 electric buses to be subsidized under the scheme, 6,265 were sanctioned to states. Of these, supply orders had been issued for 3,118 buses by state transport utilities till 31 May.

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