FAME II scheme revision seeks greater push for electric 2-, 3-wheelers and e-buses

The government of India’s ambitious FAME II (Faster Adoption and Manufacturing of Electric Vehicles in India) Scheme, which was announced in March 2019 with a budget of around Rs 10,000 crore. Thanks to the stringent criteria and multiple challenges to meet the same witnessed less-than-expected results.

Nonetheless, the Department of Heavy Industry Ministry has announced partial amendments to the scheme which is expected to help drive higher adoption of electric two-, three-wheelers and buses.

As per the revision in the FAME II scheme, the ministry has announced demand incentive of Rs 15,000 per KWh for electric two-wheelers almost double of the existing subsidy, with a maximum cap at 40 percent of the cost of vehicles. This would translate to an incentive of at least Rs 45,000 for an electric two-wheeler meeting the FAME II criteria.

On the electric three-wheeler front, the Heavy Industry believes ‘aggregation will be the key method for bringing the upfront cost of electric 3W at an affordable level and at par with ICE three-wheeler.’ For this the ministry says state-owned Energy Efficiency Services (EESL) will come out with an aggregate demand for 300,000 electric three-wheelers for multiple user segments. The details will be worked out by EESL for implementation.

Lastly, for electric buses, the Heavy Industry Ministry states 4 million plus cities – Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat, and Pune – will be targeted. EESL will again go for aggregation of demand in these cities for the remaining e-buses on OPEX basis. The details shall be worked out by EESL for implementation.

Industry welcomes move
Tarun Mehta, CEO and co-founder Ather Energy said: “The revision in the FAME policy, increasing the subsidy by 50% per KWh is a phenomenal move. Sales of electric two-wheelers have grown despite the pandemic and with this additional subsidy, we expect electric two-wheeler sales to disrupt the market, and clock over 6 million units by 2025. Ather Energy already has plans to expand distribution to 30 cities in the next 6 months and this increased subsidy will help accelerate consumer demand, immensely. The government's continued support to drive adoption of EVs, with a keen focus on locally built electric two-wheelers will make India the manufacturing hub of EVs.”