Can the FM turbo-charge EV sales?

India’s electric vehicle (EV) journey had a paradigm shift when the government announced the National Electricity Mobility Mission Plan (NEMMP 2020) in 2013. This initiative received a solid boost with the launch of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, among other measures.

Phase I of FAME was launched in April 2015 and went up till March 2019. It was implemented with an outlay of ₹895 crore and 2,69,438 EVs approximately were sold in the country, as per data from CEEW-CEF’s recent report, ‘Financing India’s Transition to Electric Vehicles’. Phase II was floated in April 2019 with an outlay of ₹10,000 crore and will go on till March 2022.

The downturn of the automobile sector in 2019 and the pandemic in 2020 only slowed down the progress towards the ambitious target of NITI Aayog that 70 per cent of all commercial cars, 30 per cent of private cars, 40 per cent of buses, and 80 per cent of two-wheeler and three-wheeler sales to be electric by 2030 (NITI Aayog and Rocky Mountain Institute 2019 via CEEW-CEF’s report).

Areas to focus

“The progress in EV adoption in the country so far has been very slow. The key reasons have been lack of charging infrastructure, high upfront cost of EVs, lack of attractive financing options and absence of strong local EV supply chain,” said Deepak MV, CEO and Co-founder, Etrio, adding, “However, things are looking to change for good. With battery prices sliding and strong government incentives, the EVs are becoming price-competitive by the day. The key areas of focus should be to set up charging infrastructure and enable strong investments in manufacturing and technology in the country.”

Deepak also said that measures such as scrappage incentives, faster regulatory approvals and creating charging infrastructure like those already in petrol retailing outlets will propel EV adoption.

“There is an increasing demand for EVs, especially the ones that are rich in terms of features and functionalities,” said Rajeev Chaba, President and Managing Director, MG Motor India, adding, “Yet, there are a few core areas that can catalyse market adoption. They include battery charging time as well as battery cost and capacity. Advancements on the battery front should also make EVs more appealing for customers in terms of the range and initial cost.”

Under FAME-II, over 44,000 vehicles have been sold already. This phase intends to create demand by supporting 10 lakh electric two-wheelers, five lakh electric three-wheelers, 55,000 electric four-wheeler passenger cars and 7,000 electric buses. California-based Tesla is also expected to enter the Indian market this year and experts said that the company’s entry will make India’s EV landscape more competitive, plus provide the much-needed boost that the renewable energy sector in the country needs and encourage entrepreneurs to innovate more.

Expectations in 2021

With Budget 2021 in the offing, Deepak said that measures to enable the charging infrastructure in the country at a faster rate, support for attractive financing options for electric vehicles, inclusion of retro-fitment incentives in FAME II policy, faster roll-out of tax refunds and incentives, and smoother regulatory approvals will help enhance India’s EV journey.

“The government must support the sector in different ways to make EVs more affordable and viable. These measures can include exemption on road tax, lower power tariffs for charging EVs, exemption of parking fees for EV users, exemption of permit costs, among others,” Chaba said.