After 73,633 units sold, subsidy to mild hybrids under FAME scheme withdrawn

The government has withdrawn incentives given to mild hybrid vehicles under the FAME India scheme. As per a notification from the Ministry of Heavy Industries and Public Enterprises, mild hybrid technology will stand excluded from the benefits of the FAME India scheme with effect from April 1, 2017. This information is as per a PTI report.

Earlier, mild hybrid, strong hybrid, plug-in hybrid and pure electric vehicles were given incentives under the scheme. While extending the Phase I of the scheme to September 30, the notification, however, said, "Sales of mild hybrid vehicles by dealer to retail purchasers effected up to March 31, 2017 will not be affected..."

The government had launched the FAME India scheme in 2015 with an aim to promote eco-friendly vehicles, offering incentives on electric and hybrid vehicles of up to Rs 29,000 for bikes and Rs 138,000 for cars. It envisaged Rs 795 crore support for the first two fiscals. FAME India is part of the National Electric Mobility Mission Plan (NEMMP) and being administered by the Heavy Industries Ministry.

Under the FAME India Scheme, the demand incentive amount has been determined for Electric / Hybrid Vehicles (xEVs) taking into account the principle of Total Cost of Ownership (TCO), payback period on account of savings and cost of maintenance. Further, the demand incentives has been categorised in two slabs – Level 1 and Level 2, so as to promote the development of technologies and vehicles with higher fuel savings potential.

Impact on Maruti Ertiga, Ciaz and Mahindra Scorpio mild hybrid sales 
The decision to withdrawn incentive to mild hybrids will impact the country’s largest carmaker Maruti Suzuki India as also Mahindra & Mahindra’s Scorpio. Maruti Suzuki’s premium Ciaz sedan and Ertiga MPV, both equipped with Smart Hybrid Vehicle by Suzuki (SHVS) technology, have benefited from the scheme. The Ciaz was the first Maruti model with SHVS.

A mild hybrid vehicle has an electric motor, which on its own cannot run a vehicle but assists normal engine by using recovered energy stored in a battery and helps save fuel. Maruti Suzuki’s Ertiga and Ciaz SHVS models had received incentives of Rs 13,000 each under the scheme. While the SVHS-equipped Ertiga is priced between Rs 717,000 and Rs 875,000, the Ciaz is priced between Rs 787,000 and Rs 957,000 (ex-showroom Delhi). The Ciaz, which has substantially benefited from the FAME India scheme, has recently crossed sales of 150,000 units in the domestic market.

Likewise, in July 2016, Mahindra & Mahindra launched its mild hybrid technology ‘Intelli-Hybrid’ on the new Scorpio which had an ex-showroom price of Rs 12.84 lakh (Navi Mumbai, BS IV) for the top-end S10-2WD model.

73,633 mild hybrid four-wheelers sold till end-February 2017
As per information provided by minister of state in the Ministry of Heavy Industries & Public Enterprises, Babul Supriyo in the Rajya Sabha last week, a total of 111,897 vehicles have benefited from the FAME India scheme till now, in the period April 1, 2015 to February 28, 2017.

As per the detailed statistics below, four-wheeler mild hybrids have benefited the most with 73,633 units being sold in the 23-month period. They have also received total incentives of Rs 95.72 crore.

Delhi-based green body and advocacy group Centre for Science and Environment (CSE) has welcomed the move. It said mild hybrids have blocked the scaling up of strong hybrids and battery-operated electric vehicles. This is because, although regarded as hybrids, these vehicles do not offer a comparable level of fuel and emissions reduction as full hybrids.

Over 65 percent of the FAME incentives have so far gone to mild diesel hybrid cars that already enjoy substantial excise cuts such as concessional VAT in some states. From April 1, 2015, when the FAME scheme was launched, till February 28, 2017, a total of 111,897 vehicles have benefited, with mild hybrid four-wheelers accounting for 73,633 units. Strong hybrid cars accounted for a mere 1.7 percent and electric vehicles, only 1 percent.

"By removing the mild diesel hybrids from the FAME scheme, the entire incentive amount has now been unlocked for the benefit of electro-mobility programme. These mild diesel hybrids are a marginal improvement over conventional diesel models, but significantly more polluting and fuel inefficient compared to electric and strong hybrid cars," said Anumita Roychowdhury, executive director-research and advocacy, CSE.