FAME I v/s FAME II – Major scope, opportunities, impact on EV market and boost to industry
With the implementation of FAME scheme, Government of India is destined to pave way for maximum adoption of Electric/Hybrid vehicles. This scheme has been welcomed by almost all the players in EV industry/Market. Mr. Ashwini Tiwary, CMO and Director Autobot India, hailed this scheme adding that it’s a positive step towards a greener & Healthier India.
This scheme aims to save 120 million barrels of oil and 4 million tons of carbon di-oxide and lowering of vehicle emissions by 1.3% by 2020.
In India, EVs constitute less than a percent of the total vehicle sales. At present nearly 4 lakh electric 2-wheeler and a few thousand electric cars are on Indian roads. In a recent communication with Ministry of road transport & highways and NITI Aayog, the government announced its aim of increasing share of electric vehicles from current less than 1 percent to nearly 30 percent by 2030. We can expect more than 200 million electric 2-wheelers, 34 million electric cars and 2.5 million electric buses by 2030.
FAME (Faster Adoption and Manufacture of Hybrid & Electric Vehicles) is a major breakthrough in the development of EV industry. It was introduced by Ministry of Heavy Industries & Public Enterprises in 2015 under National Electric Mobility Mission Plan (NEMMP). The main idea behind introducing this policy is the promotion and development of eco-friendly vehicles which includes electric/hybrid vehicles. This is planned to be done by incentivizing the purchase of EV/Hybrid Vehicles which will be mostly in the form of subsidies. Government intends to invest close to Rs. 14000 crore in creating better infrastructure and preferment of these vehicles.
This scheme covers 2-wheeler, 3-wheeler and 4-wheeler. The four main areas of focus are
- Technology development
- Demand creation
- Pilot projects
- Charging infrastructure
The total expenditure for Phase-I has been increased from Rs. 795 cr to Rs. 895 cr.
Fund Allocation in the overall scheme
As per the information given by Mr. Babul Supriyo, Minister of state of heavy Industries and public Enterprises, so far Rs. 579 crore has been allocated under this scheme. It can also be observed that the fund allocation increased with every year.
The scheme is drafted to be introduced in phases. Phase 1 also called FAME I has been brought into existence from April 01, 2015. This scheme, initially scheduled upto April 31, 2017, was extended till March 31, 2019 or till notification of FAME II whichever is earlier. Declaration of FAME II came before the extended date. Recently the union cabinet head by Prime Minister Narendra Modi announced the second phase of FAME with Rs. 10,000 crore outlay over the period of 5 years. This will come into effect from April 01, 2019.
In the meeting, the cabinet chaired by prime minister approved setting up of a National Mission on Transformative Mobility and Battery Storage and a Phased Manufacturing Program (PMP).
PMP has its validity till 2024 where its main motive would be to support establishing of manufacturing plants in India for the production of export-competitive integrated batteries and cells.
What’s new in FAME II?
Where FAME I focused on promoting manufacturing of electric and hybrid vehicles, FAME II is set to give a push to electric vehicles in public transport that includes shared transport. As of now, Lucknow (LCTSL), Kolkata (WBTC), Atal Indore City Transport Service Limited (AIVTSL), Maharashtra, Uttar Pradesh and a few more have already initiated the use of electric vehicles in public transport. Currently, incentives are given on two-wheelers and three-wheelers. Under FAME II, more EVs will be brought under its umbrella. In two-wheeler and three-wheeler segment, Public transport vehicles and vehicles registered for commercial use will be benefitted. Whereas, in two-wheeler segment concentration will be on private vehicles.
Incentive benefits will be extended to the vehicles fitted with advance batteries like lithium-ion battery. This is done to encourage advance technologies. Moving a step forward in charging infrastructure, 2700 charging stations are to be set in metros, smart cities, cities of hilly states and million-plus cities. This will be done in a way that one charging station is available in a grid of 3km × 3km.Charging stations are also proposed to be set up on both sides of national highways at a break of 25kms. Rs. 1000 crore has been kept aside for setting up charging stations.
In other countries there are incentives on charging infrastructure in different forms. On private property, a charging point is partly subsidized in Netherlands. The public charging infrastructure in Norway is absolutely cost free.
Projected sale of electric/hybrid vehicles under the NEMM scheme is 6 to 7 million units. Additionally, a decrease of 1.5% in carbon dioxide emissions is expected by 2020. This phase is also going to profit the manufacturers who invest in developing electric vehicles and its components as they are also eligible for incentives. For this the centre has released an advisory to the states to devise EV policy and provide additional fiscal and non-fiscal incentives to manufacturers and buyers.
Current incentives range
Incentives given to electric scooters ranging from Rs. 1700 to Rs. 39000, 3-wheelers incentives range from Rs. 3300 to Rs. 61000 and 4-wheelers incentives range from Rs. 11,500 to Rs. 1.43 lakh. Also, electric buses which cost Rs. 55lakh or less are also covered under this scheme. The main focus of this missions will be on manufacturing, fiscal incentives, regulatory framework, overall demand creation, specification and standards and research & development. Autobot India, a leading EV training company, runs two interesting models to support these objectives: EVTLC and AERIC. Candidates are groomed in a way that they can meet the new generation requirements and new technological updates. Under the model of AERIC, Autobot India sets up an R&D lab with state-of-the-art infrastructure. Mr. Ashwini Tiwary, Director & CMO Autobot India, praised this scheme but on the other hand he shared its negative aspects. According to him, ‘The restriction on incentives to be given only on 3- and 4-wheelers put for commercial use will be a setback in the growth of EV industry. Many International brands were set to launch newly designed vehicles which now they fear to do so’.
At present less than 10 percent buyers put their vehicles for commercial use. Mr. Tiwary suggests there should be a second thought on this decision of government.
We are eagerly looking forward to more participation from public both in creation and utilization.