FAME II Scheme Hasn’t Been A Near-Perfect Template for EV Adoption

FAME II Scheme Hasn’t Been A Near-Perfect Template for EV Adoption

FAME II Scheme Hasn’t Been A Near-Perfect Template for EV Adoption
{data-social}

Sales of electric vehicles across the country clocked a 20 % growth for the financial year 2019-20 - posting sales of 1.56 lakh units over 1.26 lakh units registered over 2017-18 - largely spurred by electric two-wheelers (scooters)


There has always been a great deal of talk about whether the FAME II scheme has actually helped fast-forward the Indian EV ecosystem. The FAME I scheme initially offered a total outlay of Rs 795 crore that was subsequently raised to Rs 895 crore – the outlay was raised to Rs 10,000 crore over a three-year period under FAME II scheme. But despite the big bang subsidy announcement on the part of the government, there is a general line of acceptance among electric vehicle (EV) manufacturers that the scheme hasn’t been a near-perfect template for the EV ecosystem to thrive.

EV manufacturers, a large chunk of whom comprise the two-wheeler segment, especially electric scooters, haven’t quite found the FAME II scheme to their liking and instead adopted an approach of selling EVs outside the subsidy gamut of the scheme. “EV manufacturers have devised a way of selling vehicles without availing the FAME II subsidy by selling low to mid-speed vehicles (such vehicles does not qualify for FAME II scheme incentives). These EV players have not been able to avail subsidy advantage for their customers as EV prices were going up significantly, which meant that these players had to resort to selling low to mid-speed vehicles by doling out heavy discounts. Of course, such a scenario meant that EV industry sales did not drop but sales of subsidised EVs did dip,” said Sohinder Singh Gill, Director General, the Society of Manufacturers of Electric Vehicles (SMEV) & CEO, Global Business, Hero Electric.



On the positive front, sales of electric vehicles across the country clocked a 20 % growth for the financial year 2019-20 - posting sales of 1.56 lakh units over 1.26 lakh units registered over 2017-18 - largely spurred by electric two-wheelers (scooters). The subsidy aspect of the FAME II scheme may not have sounded like music to the ears of EV stakeholders, but there is no denying the fact that the FAME II scheme unlike the FAME I scheme provided a certain degree of direction to the country’s EV push. “The FAME II has done well in catalysing the country’s EV ecosystem, as there is a considerable amount of work happening in the areas of charging infrastructure, standardisation, electricity rules, etc. There is policy clarity something that was missing in the FAME I Scheme. The slashing of GST on EVs to 5 % from 12 % has also been a much-welcome step,” observed Gill.

Saurabh Kumar, Managing Director, Energy Efficiency Services Limited (EESL) brushes aside the talk that the government was slow in implementing the FAME II scheme. “Look, the finance bill was passed around September and this paved the way for availability of money for implementation of the scheme. Technically speaking, the five-month period of actual work in the policy is actually a good start for EV adoption,” he pointed out.

However, Kumar is convinced that the FAME II scheme has room for tinkering in future. “The scheme can be surely tweaked for the future – it can bring personal four-wheelers under its ambit. The Indian market currently has four to five electric models available and that should be a strong enough case to incorporate personal cars under this scheme,” he opined.

Clearly, the Indian EV space promises plenty of excitement in coming months - the arrival of Hyundai Kona Electric, Tata Nexon EV, MG ZS EV, Mahindra e-KUV 100 among other soon-to-be rolled out EV products will ensure loads of action in this space.