FAME scheme must continue for at least 3-5 years: Assocham report

The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme must continue for three to five years more to ensure electric vehicle (EV) market matures, and benefits for both EV and hybrid electric vehicles (HEVs), need to be continued. For EVs, benefits may be linked to battery size and road tax exemption for strong HEVs needs to be encouraged in parallel to EVs, a study by industry body Assocham and Nomura Research Institute (NRL) Consulting, a global think tank, said on Friday.

A new production linked incentive (PLI) scheme should also be introduced to incentivise the charging infrastructure, upstream battery process with separate trance for small and medium enterprises, it said.

Viksit Bharat

The report titled – ‘Building India an Electric Mobility Hub for Viksit Bharat’ –- further said that subsidies schemes targetted towards testing and validation of EV components would accelerate launch of quality products, and India should target to expand its exports of EVs and components to smaller fast developing economies like South East Asia, Latin America (LATAM) and Middle East & Africa (MENA).

“With its existing manufacturing capabilities, skilled workforce and supportive policy environment, India has the potential to emerge as a leading global hub for EV production...fostering innovation through startup ecosystems and partnerships with global technology companies will be essential in driving the next wave of advancements in electric mobility,” Deepak Sood, Secretary-General, Assocham, said.

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Electric mobility

He said establishing a robust EV infrastructure is imperative to support the widespread adoption of electric mobility and that entails creating a comprehensive network of charging stations, promoting battery-swapping technology, and advancing energy storage solutions.

“Public-private partnerships will play a pivotal role in expediting the deployment of this infrastructure, ensuring that both urban and rural areas have access to reliable and cost-effective charging options,” Sood added.

The study also highlighted that globally the purchase of EVs is focussed around purchase incentives/ vehicle credits for EVs and tighter emission norms coupled with EV sales targets/ ban on internals combustion engine (ICE) vehicles forcing the phasing out of ICE especially diesel.

FAME III scheme

In India, the FAME-III scheme is expected to come within the next two months, which will replace the temporary Electric Mobility Promotion Scheme (EMPS) 2024, launched in March this year with a total outlay of ₹500 crore till July 31, which was extended till September 30, with a total outlay of ₹778 crore.

However, Nitin Gadkari, Minister of Road Transport and Highways, recently said that there was no need to provide subsidy to EV makers as consumers are now choosing EVs or CNG vehicles on their own.

But, companies like Mahindra & Mahindra (M&M) said that with just 2.2 per cent penetration, EV journey in India is just beginning and it is only since 2019, that GST benefits have kicked in, and 2021, since PLI investments have been in place, which is less than five years, while countries like China had focused policies of more than 15 years resulting in 25 per cent EV penetration in the country.

“In order to reach a price parity with ICE, we need localisation of many key components and government support is required to scale EVs to help enable this localisation. EV technology requires high development cost and manufacturers have already invested Rs.75,000 crore towards setting up the EV ecosystem. Hence manufacturers need government support to recover these investments,” a spokesperson at M&M told businessline.

Only EVs can help India achieve its carbon emission reduction targets of 45 per cent by 2030 and reduce India’s oil import bill. “We strongly believe that for a sustained growth, continued support is necessary from the government to achieve its EV penetration goal of 30 per cent by 2030,” the spokesperson added.