Important To Build On FAME II Subsidies By Indigenising EV Components

Industry Track FAME II India Subsidies Indigenising Electric Vehicles Components

Cleaner mobility is an absolute need, and there’s widespread acceptance that of all alternate fuel technologies available in the market, electric mobility is the most pragmatic solution. However, it won’t be a far-fetched exaggeration to suggest that policy makers in the country have been quite indecisive with its EV policy – in fact, a slew of policy flip-flops has been nothing but a dampener on India’s EV push.

All these uncertainty appears to be a thing of the past with the government allocating Rs 10,000 cr under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) II scheme, which will be implemented over a period of three years with effect from April 1, 2019. It may be worth noting that the latest move is an expanded version of the FAME scheme that was launched on April 1, 2015 with a total outlay of Rs 895 cr. The FAME II scheme plans to support 10 lakh electric two-wheelers, five lakh three-wheelers (meant for public transportation), 55,000 four-wheelers (meant for public transportation) and 7,000 buses.


Understandably, there is a buzz of excitement and hope across the automotive industry over FAME II. There is no denying the fact that the scheme will not only fast-track the electric vehicle ecosystem, but also provide a certain degree of clarity and direction for EVs to thrive across the country.

Mahindra Electric, one of the pioneers of electromobility in India, said the FAME II scheme is just what the doctor ordered for the Indian EV ecosystem. “The scheme assures a long-term stable policy and outlines a clear vision for OEMs, component suppliers, fleet operators and dealers to have a clear direction for the next three years and help India to be one of the global EV leaders,” said Mahesh Babu, CEO, Mahindra Electric. He added that the scheme aligns well with the National Electric Mobility Mission Plan 2020 (NEMMP) and addresses key issues such as national energy security, mitigation of adverse impact of vehicles on the environment and growth of domestic technology and manufacturing capabilities.

The FAME II scheme accords high priority to electrifying the public transportation space and talks little about electrifying the personal mobility space. Babu felt that the move will work well for the Indian market, as fleet becomes the first priority given the impact on oil import, pollution and asset utilisation. The focus on public transportation is the need of the hour, he said and added that electric three-wheelers, shared fleet of electric cars and electric buses will in a way create an ecosystem for personal buyers to consider EVs.

The FAME II scheme talks about offering incentives only to those vehicles that are powered by lithium-ion batteries, which effectively means that lead acid batteries will go off the EV radar in due course. Babu said globally lead has been phased-out given its negative impact on the environment and Mahindra Electric is aligned with the government’s view of leveraging advanced battery technologies as defined by FAME.

Electric three-wheelers are expected to witness faster adoption in India on the back of the FAME II scheme



Akshaye Barbuddhe, Business Head, EV Charging Solutions, Delta Electronics India said lithium-ion batteries are also more efficient as it provides a constant voltage through the whole discharge cycle, whereas lead acid batteries experience a constant drop of voltage. Maintaining constant voltage also translates into better efficiency. Of course, lead acid batteries are the cheapest to produce but as Barbuddhe pointed out, the real cost of owning a lithium-ion battery is far lower when factoring in performance and battery longevity. They are safer to use and offer a superior option in terms of environmental impact too.

One cannot overlook the fact that charging infrastructure is perhaps the biggest roadblock for EVs to thrive in India. And the FAME II scheme appears to address this as it has proposed establishment of 2,700 charging stations across metro as well as across other smart cities, Tier 2 cities and hilly regions and at least one charging station in a grid of 3x3 km.

Barbuddhe underpinned the role of DISCOMs in the EV push. “The government should push power DISCOMs to provide much-needed assistance, in terms of facilitating knowledge sharing and installation procedure to its consumer base,” he said. He urged the government to map out a long-term strategy to develop software solutions that will cater to the future needs of connecting all public charging stations with a common platform. Doing that would provide easy access to charging stations for end-users as well as ensuring 24/7 monitoring of charging stations by respective agencies as well as Central Electricity Authority (CEA). Effective grid management is critical towards ensuring EV charging infrastructure. Without adequate grid management, the system created to cater to EV infrastructure would eventually collapse, he said.

The e-scooter market is generating a lot of buzz with many start-ups rolling out customer-friendly products


Although appreciative of the FAME II scheme announcement, the industry has been equally critical of the scheme’s position on localisation of EV components to avail of incentives upfront. Ashim Sharma, Partner, & Group Head, Nomura Research Institute (NRI) Consulting & Solutions India, said India must attach importance to cell level manufacturing for EVs.

“If we import battery cells from abroad and assemble it together in India and make a battery pack, then there is limited value-add happening in India. A cell importing approach will reduce the manufacturing base in India in EVs when compared to ICEs,” he pointed out. Delving deep into battery management system (BMS), Sharma said the hardware of the BMS will continue to be imported as India does not have a vibrant semi-conductor, sensor manufacturing base, while the software testing for the BMS is readily available.

Electric motors are another area India can explore indigenising for EVs be it induction motors and permanent magnet motors. “Performance wise, there has been a slight shift towards permanent magnet motors but these are made of rare earth materials and large extraction of such materials happens in China. India needs to bring about technological innovations to reduce the amount of such rare earth materials used or look at other alternatives. Induction motors have overheating deficiencies and again innovation is needed to reduce this overheating.”

Kaushik Madhavan, Vice President – Mobility, South Asia, Frost & Sullivan felt that electric motors can be the first step towards indigenising components and sub-systems in the EV mobility ecosystem. “The electric motor technology in India is far more advanced as some Indian players are developing this technology. We could then look at battery manufacturing, including cells, and battery packaging.”

Madhavan called for intense discussion on how the industry can approach recycling of used batteries. There is a need to study and understand what we can do with used batteries, recycle them and make them viable for second life applications, he said. “As for now, there is no clear mandate or roadmap for battery recycling and this area can be the next stage of discussion so that a framework is in place for second life applications,” he suggested.

Given India’s limited EV manufacturing base and the evolving battery technology, it is imperative to incentivise the manufacturing ecosystem in order to optimise manufacturing costs that would ultimately cascade towards reduced EV prices, said P Pranavant, Partner, Deloitte India.


The FAME II scheme is clearly just what the doctor ordered for the Indian EV space. But it is equally critical that adequate steps are undertaken for indigenising EV components in areas of BMS, motors, controllers, etc. The EV push can only be a viable customer proposition in India when end-users feel that there is a ‘fundamental need’ to buy it.

TEXT: Suhrid Barua