The second phase of the Faster Adoption and Manufacturing of Electric and (hybrid) vehicles (FAME), a government-backed scheme to incentivise electric vehicles (EVs), has been tabled before the Union Cabinet.

The second phase of the FAME scheme was expected to be implemented from April 1, 2018. However, it is yet to be approved by the Union Cabinet. Under the second phase, only advanced chemistry batteries will be promoted.

Reacting on this development, Hemalatha Annamalai, CEO and founder of Ampere Electric Vehicle and South Chapter chief of SMEV, queried, “Does the government have concrete data from Indian research labs on the advanced lithium-ion battery chemistry’s performance characteristics for Indian temperate, power and road conditions?”

She explains, “India’s current EV ecosystem does not have adequate number of lithium-ion high powered vehicles on road. Moreover, these vehicles are costly as there is no manufacturing taking place in India and it’s mostly imported, which increases the overall cost of the vehicles. Could the government make GST as zero for first/second/third-time buyers of the advanced batteries and for the entire duration of its usage? This will enable moving to ‘electric’ to stay with ‘electric’ for a longer time.”

As per the unsanctioned draft, the incentives will be restricted to new energy vehicles used for public transport and commercial purposes and for high-speed two-wheelers. Conveying her dissent on the same, Hemalatha stated, “On behalf of the EV industry, I request the government to be considerate and be consultative before announcing such policies. No information on this abrupt discontinuity of subsidy for low-speed models was discussed in the first place.”

Banks as enablers of EV adoption 
On behalf of the industry, she has even extended a suggestion to the government. “There should be some financing options from the banks for the lead battery EV two-wheelers. Banks need to handhold the lower and middle-income class and act as an enabler. Whilst subsidy may not be required for long-term, it may be required until the industry gets volume drivers. Ending the subsidy under FAME will completely make it unaffordable as it will be very difficult to buy EV two-wheelers at their own, so financing through banks must be mandated quickly,” said Hemalatha.

Hemalatha has previously stated that the continuation of subsidy is vital to support the development of the electric vehicle market and for the manufacturing eco-system in India.

According to sources, of the Rs 8,730 crore alloted for FAME II, a majority portion has been set aside as demand-side incentive during the five years of the second phase. The funds under FAME II is set aside for buses, four-wheelers, high-speed two-wheelers (with the maximum speed greater than 25km) and for high-speed three-wheelers.