New Delhi: To give a push to the electric vehicle manufacturing and adoption in the country the government has allocated Rs. 10,000 crore to be spent over three years starting from April 1, 2019. The allocation is part of the much awaited second phase of the incentive scheme for electric vehicles (EVs) under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (or FAME II) which finally got a cabinet nod on Thursday. The outlay of Rs 10,000 crore is eleven times more than the outlay of FAME I which was Rs. 895 crore. This significant increase in the outlay, according to automobile industry players, shows that electric and hybrid vehicles are gaining much-needed momentum in the country.
FAME was launched by the Ministry of Heavy Industries and Public Enterprises (MoHIPE) in 2015 with a vision that 30 per cent of the automobiles sold in India will be electric by 2030. It aims at promoting cleaner mobility alternatives and reducing the country’s dependency on imported fossil fuels and cut down vehicular emissions which is a huge contributor to air pollution. Phase I (FAME I) was initially launched for a period of two years but got extended multiple times and faced many policy revisions in the last four years.
Currently, India has a little over 1.2 lakh units of electric vehicles (excluding the unregistered e-rickshaws) which make up for less than one per cent of the total vehicles on the road. The country has set a target of having 15 per cent of total vehicles on road as electric by 2024. The latest proposal which finally received approval from of the Union Cabinet Committee On Economic Affairs (CCEA) chaired by the Prime Minister Narendra Modi on Thursday comes a month after the Interim Budget presented by stand-in Finance Minister Piyush Goyal who declared electric mobility as one of the ten guiding principles for India’s Development Vision 2030.
Here are five things to know about the recently launched FAME II which aims to address the issue of environmental pollution and fuel dependency:
Subsidy On Purchase Of Electric Vehicles And Hybrid Vehicles
FAME II aims to boost the demand for EVs and hybrid vehicles by bringing down the cost of these vehicles through subsidies and pricing it competitively with the conventional fuel combustion vehicles. Currently, electric cars cost almost 40 per cent higher than conventional cars running on fossil fuels.
In order to encourage advance technologies, FAME II will cover only those vehicles which are fitted with advanced batteries like lithium-ion batteries and other new technology batteries. Vehicle fitted with lead-acid batteries will not be covered in this scheme.
Charging Infrastructure To Be Strengthened
The scheme plans to set up charging infrastructure across the country to build a robust ecosystem for EVs. As many as 2,700 charging stations will be set up in metros, cities with million-plus population, smart cities and cities of hilly states across India. The plan is to ensure availability of at least one charging station in a grid of 3km x 3km. Also, charging facilities will be established on major highways connecting major cities on both sides of the road at an interval of about 25 km each.
Emphasis On Pushing Public Transport And Cab Services To Go Electric
The schemes emphasizes on the electrification of public transportation and shared transportation like cabs, office pick and drop facilities and other such services. Financial assistance will be provided for at least 7000 buses to be deployed across the country with a buyer incentive at Rs. 20,000 per Kilowatt Hour (KWH) of the battery fitted in the bus. For example, if a bus is fitted with a 250 KWH battery, its buyer will get an incentive of at least Rs. 50 Lakh. States like Uttar Pradesh, Delhi, Maharashtra, West Bengal, Karnataka, Tamil Nadu, and Kerala have already started electrifying their public transport fleets and other states are expected to follow soon.
In three-wheeler and four-wheeler segments, FAME II offers a subsidy of Rs. 10,000 per Kilowatt Hour (KWH) battery for buyers of electric three-wheelers and four wheelers. For example, the average price of an electric car in India is now about 10 lakh rupees and typically has a battery up to 20 kWh, so the discount under the new scheme would be Rs. 2 Lakh. The scheme plans to support at least five lakh three-wheelers and 55,000 four-wheelers across the country. However, buyers of electric and hybrid cars for private use will not be getting any subsidy under FAME II. The subsidy for four-wheelers under the scheme is only for the cars registered for commercial use and shared mobility services. According to experts, this may slow down the penetration of electric mobility in four wheeler segment among individual users.
Incentives For Two-Wheelers
In the two-wheeler segment, the focus will be on private vehicles for which the subsidies amount to Rs. 10,000 for each kilowatt-hour (KWH) of battery capacity, which is almost 50 per cent of the total battery cost. Through the scheme, it is planned to support 10 lakh electric two-wheelers.
While the subsidy decided for two-wheelers under FAME II will boost the demands for Electric two-wheelers with higher battery capacity, it will act as a dampener for 1KWH, single battery two-wheelers which make up for a large proportion of the electric two-wheelers market at present. Incentives for such two-wheelers which give a speed of 40km/hr and range of 60-70 Km per full charge have been reduced from Rs. 22,000 under FAME I to Rs. 10,000 under FAME II, making these costlier by Rs. 12,000.
Exemption Of Road Tax, Registration Fees And Parking Charges
Under FAME II, the users of electric and hybrid vehicles are exempted from paying road tax, registration fee, and parking charges. MoHIPE has made these incentives as a pre-condition for states to be included in the FAME II.
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