Shifting gears

With vehicular pollution increasingly affecting our quality of life, phase II of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme hasn’t come a day too soon. In the works for at least two years now after the initial expiry of phase I of the scheme in March 2017, FAME II will be operational from April 1, 2019, and will provide demand incentives ranging from ₹20,000 per vehicle for buyers of e-two wheelers to ₹50 lakh per vehicle for e-bus buyers over a period of three fiscal years. FAME II is an improvement on the earlier phase on a few counts. The scheme has been allotted ₹10,000 crore, which is over a tenfold jump from the measly ₹895 crore set aside for the first phase. With more than half the allocation going towards e-buses and e-three-wheelers, including e-rickshaws, the focus of FAME II is on creating green mass transport systems.

Also, having learnt the lessons from FAME I where the not-so-clean mild hybrids cornered much of the incentives, FAME II essentially encourages only electric technology and in that, only lithium ion battery or other newer-technology, battery-based vehicles. The only exception is with respect to four-wheelers, where strong hybrids and plug-in hybrids are also eligible for incentives. FAME II’s focus on electrification of public transport is in sync with the government’s vision for 2030 put out by the NITI Aayog. In its May 2017 report titled ‘India Leaps Ahead: Transport Mobility Solutions for all’, the think-tank calls for 100 per cent electrification of three-wheelers, commercially used four-wheelers as well as vehicles used in public transport by 2030, while aiming for 40 per cent electrification in private two- and four-wheelers. The sharp reduction in lithium ion battery costs has made EVs an attractive option.

But with EV penetration in India currently at an abysmal 1 per cent, FAME alone is not enough to reach the 2030 target, be it for public transport or private vehicles. For one, while the scheme encourages privately-owned e-two-wheelers, on the four-wheeler front, the emphasis is only on vehicles registered for commercial purposes. Given the huge ownership of privately-owned cars, excluding green personal cars from FAME incentives was a mistake. Two, to encourage faster adoption, State governments should chip in with fiscal and non-fiscal incentives for manufacture and sale of clean energy vehicles. Karnataka, Kerala and Delhi have come out with their EV policies. Supply chain incentives in the form of lower import duties or other local taxes for critical parts must not be forgotten. Finally, a robust charging infrastructure is absolutely crucial. These measures will go a long way in making EVs popular by lowering ownership and running costs. For transport to go truly green, it must also be accompanied by a rising share of renewables in electricity output. Environmentally sustainable batteries too should gain ground.