Parliamentary panel recommends FAME-II scheme’s extension by at least 3 more years

Committee also recommends incentivising setting up of charging stations

By Seema Prasad
Published: Thursday 21 December 2023
Representational photo from iStock

The Parliamentary Standing Committee on Industry on December 20 recommended that the Centre should extend the deadline of the Faster Adoption & Manufacturing of Electric Vehicles (FAME) - II Scheme by at least three more years.

The deadline for the ongoing FAME II scheme is March 31, 2024, with a budget outlay of Rs 10,000 crore. The main objective of the scheme is to offer upfront incentives for the purchase of electric and hybrid vehicles, and add more charging stations.

In May, the government reduced the FAME-II subsidy on electric two-wheelers registered on or after June 1, 2023. The earlier incentive of 40 per cent on the ex-factory price of electric two-wheelers was reduced to 15 per cent. The demand incentive for electric two-wheelers was reduced to Rs 10,000 per kilowatt-hour (kWh) from Rs 15,000 / kWh.

“The committee is of the opinion that in order to facilitate the transition momentum to electric mobility, more number of electric vehicles need to be supported and, therefore recommends that the ministry should broaden the scope and extend the FAME-II Scheme for at least 3 more years in consultation with the industry stakeholders to make the scheme more inclusive,” said the Parliamentary Report on the Promotion of Electric Vehicles in India presented to the Rajya Sabha on December 20.

“The committee notes that reduction of subsidy w.e.f. June 1, 2023 in case of electric two-wheelers has negatively impacted their sales. It also notes that the budget constraint was the major reason behind the reallocation of funds and for the revision of targets under the FAME-II Scheme. As there is an instant need to decarbonise the transport sector, the committee recommends that the ministry should restore the subsidy on electric two-wheelers and, if required, project enhanced budget allocations in order to maintain the momentum and pace of electric vehicles (EV) penetration, so that the desired target could be achieved by 2030,” the report added.

Phase-I of the FAME India Scheme was approved in March 2015. After multiple extensions, the deadline was extended till March 31, 2019, with an outlay of Rs 895 crore. The scheme had four focus areas — technology development, demand creation, pilot project, and charging infrastructure.

The panel recommended that the ministry should increase the number of EVs to be supported in the four-wheelers category and also include private electric four-wheelers in the domain of the FAME II Scheme, with a cap based on the cost and battery capacity of the vehicle.

The Physical and Financial Progress of the FAME-II Scheme (including claims under process) as of 19.06.2023 with revised targets as apprised to the Committee is given below

“Although the Ministry of Heavy Industries is striving hard towards Make in India and Atmanirbhar Bharat with schemes like PLI-Auto, PLI-ACC and Phased Manufacturing Programme under FAME-II Scheme, the committee is of the view that to make India a global EV hub, the ministry should have supportive, transparent, and consistent government frameworks at national, state, and local levels and also focus towards establishing dedicated manufacturing hubs and industrial parks for manufacturing of batteries, cells and EV auto components. The committee believes that this would encourage and strengthen economic development of the country,” the report suggested.

The panel was informed by the ministry that Bharat Heavy Electricals Limited (BHEL) provided Engineering, Procurement, and Construction (EPC) solutions for EV charging stations. These include solar-based charging stations, and battery energy storage systems.

Therefore, the committee recommended more funds be allocated to BHEL to facilitate popularising EV mobility. Every public sector undertaking and government institution may be asked to participate in the installation of charging stations in their premises for the use of the vehicles coming to their premises.

The panel is of the view that the scope of FAME-II be expanded or any future scheme should incentivise the installation of charging stations to individual investors so as to achieve the goal of setting up charging stations throughout the length and breadth of India, as well as to eliminate road anxiety among potential customers.

The committee also recommended that women self-help groups and cooperative societies be assisted to open and operate charging stations. They may be provided an assured return by the government from its funds.

The panel said frequent changes in the policies relating to EVs create uncertainties in the market, as well as in the EV Industry. This creates doubt in the minds of people and end users about the government’s actions, which may negatively impact the growth of the EV industry.

The government should strive towards the formulation of a consistent and stable national policy on electric mobility so that a propitious environment is created for the EV industry to promote a sustainable and clean transportation system in the country, the parliamentary report said.

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