Initially, to be implemented for three years from April 1, 2019, it will now be in force for up to March 31, 2024.
The Union Government’s decision to extend the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric vehicle (FAME) scheme by two years to 31 March 2024, will help push sales of electric vehicles, especially in the two and three-wheeler segment, in the coming years, said industry executives and analysts.
The Union government announced its decision to extend the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme by two years to March 31, 2024. The scheme, started in 2019 for promoting sales of electric vehicles, was supposed to end by 2022.
“In line with its clear policy to encourage EV adoption, the government has extended the FAME II policy by two years. This, coupled with recent changes in incentive structure and introduction of EV policies by select states, will enable faster penetration of EVs, especially two-wheelers and three-wheelers,” said Shamsher Dewan, vice president, and group head, corporate sector ratings, ICRA.
Earlier this month, the Union government increased incentives on electric two-wheelers to help boost broad-based adoption. According to some experts, this was a desperate move by the government to utilize the funds earmarked for the FAME scheme, with the sale of EVs remaining muted for the past two years.
The ministry of heavy industries and public enterprises announced a 50% increase in incentives for electric two-wheelers to ₹15,000 per kilowatt-hour from ₹10,000 per kWh. According to the new rules, the cap on incentives will be limited to 40% of the total price compared to the earlier cap of 20%. The ministry of heavy industries has also mandated Energy Efficiency Services Ltd (EESL) to procure 300,000 electric three-wheelers for use by different authorities.
The public sector unit has been given the responsibility to procure electric buses for deploying across cities.
Commenting on Extension, Sohinder Gill, director general at Society of Manufacturers of Electric Vehicles (SMEV), said, “This will allow the EV industry more time to extend the benefits to customers, due to the recent amendments and achieve the target under the scheme.”
“In the last few months, we have seen many measures have been announced by Central and State Governments, which have brought positive sentiments. The industry is prepared for a major transformation and see EVs occupying major space,” he added.
The idea of making India all-electric has been taking its roots and growing into its abundance. The continuation of the FAME II scheme will encourage the industry to grant demand for Electric Vehicles to the users in the market. Due to the pandemic, the EV industry was looking forward to the extension of the FAME II scheme by few more years so that the outlay designated support against the incentives the scheme could be expanded to hasten the demand for electric vehicles.