Indias Plan for Electric Cars

Just few days ago, union cabinet had announced that it is considering to approve the proposal entailing financial support of Rs 9,381 crore in the second phase of the FAME (Faster Adoption and Manufacturing of Electric vehicles) India scheme II spanning 5 years to boost adoption of energy-efficient vehicles in the country.

Now in a latest development regarding same, under which it was expected that government will offer incentives/ subsidy to purchase electric and hybrid vehicles, the much awaited FAME-II scheme roadmap has been postponed to undeclared time as government think tank NITI Aayog and various ministries are having a tough time building consensus regarding future roadmap to boost electric mobility in India.

According to a report by MoneyControl, fostering a proper environment for electric vehicles “will take some time” as there is no final plan for incentives to be provided.


“Having a proper EV environment will take time… We still have to decide how (and how much) the incentives will reach the citizens,”, the report said citing government officials in the know of the daily.

Government of India had launched FAME scheme in 2015 for two years, to provide subsidy on purchase on electric vehicles. The scheme, which was first extended till March 2018, has, now, been extended till September 2018.

Under the scheme, government provides subsidy up to Rs 22,000 on two wheelers, Rs 61,000 on three wheelers and Rs 1,87,000 on four wheelers.

The problem with the launch of FAME-II scheme, which now has been deferred, is the way it has been structured. For an instance, the scheme talks about 20% subsidy or a subsidy of Rs 10,000 per kilowatt for car which is pointless as it’s not going to benefit anybody. “Apart from scooters, nothing will be sold,” said the official citing reason behind postponement of the scheme.

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It has been learnt that that the government will take time before finalizing the second phase of the policy i.e FAME-II. Ministries and NITI Aayog have suggested different plans to build environment for EVs in the country and consensus building is a problem right now, said another official in the report.

“An electric car, for example by Mahindra, has 14 kilowatt power which equals to a maximum subsidy of Rs 1,40,000. A car costing Rs 13 lakh with a subsidy of only Rs 1.4 lakh is not an attractive bid,” explained the official in the report.

Related Reading – Mumbai Startup Launches Cheapest Electric Car in Compact Segment

“There are multiple issues.. NITI Aayog says that we should start by pushing electricity based public transport system in two or three cities…They don’t agree with giving incentives on few two wheelers or few cars at hand,” he said, adding that ministries, on the other hand, want to push electric mobility pan-India by subsidizing the vehicles.

Road to electric mobility has been on hard luck since the beginning of this year as the government has dropped the idea of having an EV policy in place in the country. Earlier in February, transport minister Nitin Gadkari said that India does not need a dedicated EV policy. Instead the government may come out with an action plan.

Goods and Services Tax (GST) introduced last year has also hit the EV adoption in the country as in a weird tax slabs — two wheeled electric vehicles is levied at the rate of 12%, while it is 28% for three wheeled electric vehicle.

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Recently, government said that 30,000 slow charging stations and 15,000 fast charging stations will be set up over the next 3-5 years to improve electric infrastructure. It has also been reported that Rs 9,381 crore will be spent between 2018-19 and 2022-23 under FAME-II scheme, after cabinet nod is received. Government has also apportioned Rs 260 crore for FAME scheme in union budget for 2018-19.

Meanwhile, Hyderabad Metro Rail is planning to soon launch electric vehicle (EV) charging facility with vehicle-to-grid (V2G) concept at metro stations in partnership with PowerGrid Corporation of India Ltd. With this, Hyderabad Metro will be the first metro rail in the country to provide the facility.

In January 2017, a draft of India’s 10-year energy blueprint has revealed that the government is expecting as much as 57 percent of the country’s total electricity capacity to come from non-fossil fuel sources by the year 2027 – a significant increase over the India’s Paris agreement targets, which has asked the member countries to reach 40 percent non-fossil fuel electricity by the year 2030.

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