EV game-changer: Govt makes changes in FAME-II

With a view to achieving the desired objectives of the second edition of FAME (Faster Adoption and Manufacturing of Electric Vehicles in India) Scheme and make it less challenging for industry players to adapt, the Government made some crucial changes to the scheme. 

The revisions, issued through a notification by the Department of Heavy Industry Ministry on June 12, introduced a demand incentive of ₹15,000 per KWh for electric two-wheelers with a maximum cap at 40 per cent of the vehicles’ cost. This translates into a nearly double increase in the current subsidy.

The notification also said the state-owned Energy Efficiency Services (EESL) will launch an aggregate demand for 3,00,000 electric three-wheelers for across a variety of user segments.

For electric buses, the ministry noted that it will now target cities with over 4 million-population, i.e. Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad and Mumbai etc., with EESL aiming for aggregation of demand for the remaining e-buses on OPEX basis.

The failure of FAME-II Scheme, announced in March 2019, to achieve targeted results prompted the Government to introduce these changes and EV manufacturers are obviously thrilled by the development.

Autoguide got the reaction of various players to the Government move and that’s what they had to say:   

Mr. Sohinder Gill, Director General, SMEV

“It’s an important and admirable decision taken by the Government, a move that will bring down the prices of electric two-wheelers nearer to the IC vehicles and remove one of the biggest blockades of the high sticker price of electric two-wheelers. A City Speed electric scooter with a range of 100km/charge will now cost less than Rs 60,000 and a high-speed scooter with a range of 80 km will come nearer to the price tag of Rs.1 lakh. Together with the other important factors like extremely low running cost, low maintenance and zero emission, such price levels will surely spur a substantial demand of electric two-wheelers.”

Mr. Nagesh Basavanhalli, MD & Group CEO, Greaves Cotton  

“The new and revised FAME-II incentive policy announcement by the Government is encouraging which will make electric vehicles more affordable and accessible and further boost the adoption of electric vehicles especially electric 2-wheelers and 3-wheelers in the country. With people becoming more health and environment-conscious post-pandemic and switching to personal mobility solutions, this announcement will increase the penetration level of electric scooters as well as e-rickshaws.”

Mr. Tarun Mehta, CEO, Ather Energy

“The revision in the FAME policy, increasing the subsidy by 50 pc per KWh is a phenomenal move. Sales of electric two-wheelers have grown despite the pandemic and with this additional subsidy, we expect electric two-wheeler sales to disrupt the market, and clock 6 million+ units by 2025. The Government’s continued support to drive adoption of EVs with a keen focus on locally built electric two-wheelers will make India the manufacturing hub of EVs.”

Mr. Sudarshan Venu, JMD, TVS Motor Company

“We welcome the Government’s continued support to EVs. Sustainable mobility solutions are very important for the future and TVS is investing significantly behind this. The improved incentives for electric two-wheelers will increase penetration. Such policy direction should lead to indigenous development of future technology.”

Mr. Saurav Kumar, Founder and CEO, Euler Motors

“The decision to extend the FAME-II scheme will be incremental to push EV adoption in the country. The FAME subsidies have helped EV manufacturers to build efficient and advanced vehicles in the last three years. However, the strict stipulations of the scheme have limited the OEMs to avail its benefits. Given the slow uptick of EVs, the relaxations and revisions in the scheme will ensure OEMs can continue to offer the vehicles at a subsidised cost and cultivate a larger market for electric vehicles.”

Mr. Pankaj Tiwari, Chief Marketing Officer, Nexzu Mobility

“The Government’s move to increase subsidy to electric bikes and scooters by 50 pc, subject to those that meet the FAME-II criteria, is a welcome stimulus which will boost adoption and encourage R&D and innovation for enhanced customer experience. The development will surely provide a fillip to Indian EV companies to manufacture the finest, electric high-speed mobility solutions. However, we would also like to see electric bicycles fall in the ambit of the FAME-II policy with an independent incentive for two-wheelers based on some of the key features like battery power etc.”

Mr. Ketan Mehta, CEO and Founder, HOP Electric

“The revision in FAME-II policy will help Indian EV companies in better development and sale of electric products amid the pandemic. This subsidy will help us to accelerate the demand of EV products and help the market to grow immensely. We also believe that it will promote the development of a strong EV ecosystem along with the goal to make our products 100 per cent ‘Made in India’.”

Mr. Bakar Sadik Agwan, Senior Analyst, GlobalData

“The revisions to FAME-II scheme come as a welcome move that will drive increased adoption of EVs across the given segments. The development is indicative of the Government’s aim and enhanced interest in the electrification of two-wheelers and three-wheelers which hold a major modal share in the public and private transportation. The subsequent lowering of two-wheeler and three-wheeler EV cost will result in higher sales volumes.”

Mr. Uday Narang, Chairman, Omega Seiki Mobility

“This revolutionary step by the Government to subsidise electric three-wheelers, two-wheelers, passenger vehicles and buses will provide the much-needed impetus in faster adoption, thus helping greatly in building up the ecosystem of EVs in India. We at Omega Seiki Mobility strongly support this initiative. It is a major incentive for Make-in-India local manufacturers like us, enabling us to bring more and more EVs of various segments to the country.”

Mr. Rahul Sharma, Founder, Revolt Motors

“The modification in the FAME-II scheme will prove to be a game- changer. The increase in financial incentive will further help in boosting adoption of products in the category and is a reinforcement of the Government’s commitment and intent for the EV industry. Such interventions coupled with the ongoing focus on infrastructure development can accelerate the growth of the sector immensely.”

Mr. Bhavish Aggarwal, Chairman and Group CEO, Ola

“I welcome the Government’s amendment to the FAME-II subsidy. The incentive of Rs.15,000 per KWH will help make electric two-wheelers affordable for many more consumers. I believe India has the potential to lead the world in sustainable mobility and become a big market as well as a global EV manufacturing hub.”

Mr. Jeetender Sharma, MD & Founder, Okinawa Autotech

“The E2W industry is once again experiencing a positive sentiment and a high level of interest from the Government of India. The revision to FAME-II subsidies is a welcome step that will only add zeal to the adoption of electric vehicles. Lowering the prices of electric scooters in the country will help to persuade more riders to switch from a combustion-engine model to an electric one.”