Parliamentary Standing Committee Recommends Incentives Under FAME Scheme

Parliamentary Standing Committee Recommends Incentives Under FAME Scheme

A standing committee report on ‘Promotion of Electric Vehicles (EV) In the Country’, mentions that, among category-wise EV, the production and sale of EV-three-wheeler vehicles is found to be highest in India.

It recommends that the ministry should broaden the scope and extend FAME-II Scheme for at least three more years. This would support the transition momentum to Electric Mobility. The committee mentions that the reduction of subsidy w.e.f. June 1, 2023 in case of e-2Wheelers has negatively impacted their sales. It finds two-wheeler vehicles to be a dominant category, based on comparison. 

The Committee recommends that the Ministry should increase the number of electric vehicles to be supported in the four-wheelers category and also include private e-4 wheelers in the domain of FAME II Scheme. It adds that a cap on the cost and battery capacity of the vehicle should be added. Moreover, finds “The budget constraint as a major reason behind the reallocation of funds and for the revision of targets under the FAME-II Scheme.”

The Committee notes that initially the Government had undertaken the target of supporting 55,000 e-four wheelers under the FAME II Scheme. But the revised targets have reduced the number of vehicles to the committed funds only i.e. for 11,000 e-four wheelers. Though two Wheelers is a dominant category, the share of four wheelers is also significant in the automotive sector of the country. The Committee recommends that the Ministry should increase the number of electric vehicles to be supported in the four-wheeler category and also include private e-four wheelers in the domain of FAME II Scheme with a cap based on the cost and battery capacity of the vehicle.

For decarbonization of transport sector, the committee recommends that the Ministry should restore the subsidy on e-two wheelers and, if required, project enhanced budget allocations. It can help to maintain the momentum and pace of electric vehicles penetration, so that the desired target could be achieved by 2030.

During the deposition before the Committee, takes up the issue of eQuadricycle was discussed and the Committee was informed by a stakeholder that e-Quadricycle will give a big fillip to last-mile connectivity and, based on a study, CRISIL had indicated that, “India 44 could be one of the largest manufacturers of e-Quadricycles, which would help in reducing two lakh tones of CO2 emissions.”

The Committee observes that in phase-2 of FAME Scheme, only nine major cities having a population of over 4 million were targeted. They were included in aggregation model for e-buses and among other few states that have earlier participated in operational cost model.

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The report states that the PM e-Bus Sewa, the Committee would help transform urban mobility landscape in smaller cities also. The Committee recommends that the concerned Ministries should strive for the early implementation of the scheme so that the benefits of the scheme will proliferate in an efficient manner and timely.

The Committee was informed by the Ministry of Heavy Industries that in Phase-II of the FAME Scheme, the demand incentive was initially linked to battery capacity i.e. Rs. 10,000/kWh for all eligible electric vehicles, except e-Buses (for which the incentive is Rs. 20,000/kWh), subject to capping at certain percentage of cost of eligible vehicles (i.e. 40 per cent for e-Bus and at 20 per cent for all other categories of eligible vehicles) restricted to vehicles with prices less than the threshold value.

Further w.e.f. 11th June 2021, the demand Incentive for e-two wheelers has been increased to INR 15,000/KWh from INR 10,000/KWh subject to increase in capping to 40 per cent from 20 per cent cost of eligible e-two wheelers which has been revised further to INR 10,000/kWh (maximum 15 per cent of ex-factory price) w.e.f. June 1, 2023. The number of vehicles proposed to be supported in different category of vehicles is as under:

The demand incentive was initially linked. to battery capacity