No funds for EV industry in Budget '16; announcement of Rs 200 crore likely this week

It is learnt that a fund of Rs 200 crore for hybrid and electric vehicles is to be announced in a couple of days.

By Sumantra B Barooah

29 Feb 2016

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Image courtesy: Valeo

The struggling Indian electric vehicle industry, which was relieved to see the government's announcement and allocation of funds under the FAME (Faster Adoption and Manufacturing of hybrid and Electric vehicles) scheme in Budget 2015, did not receive any additional funds in this year's Budget. Some good news came in the form of extension of fiscal sops for EV/hybrid technology beyond the March 31 deadline.

But it is learnt that a fund of Rs 200 crore would be announced in a couple of days. It is to be noted that Rs 75 crore was allotted under the FAME scheme in last year's Budget. The total amount expected during 2015-17 under the FAME scheme is Rs 1,000 crore. This amount includes Rs 200 crore raised through the automotive cess fund.

Under the FAME scheme, 60-70 percent of the funds could be used for incentivising the purchase of hybrids/EVs, 20-25 percent in building the technology infrastructure and around 10 percent each could be spent on pilot projects and charging infrastructure.

Following the Budget last year, the Indian EV industry saw some growth. Sales during the April-December 2015 period stood at around 21,000 units, up from 7,000-8,000 units during the same period in 2014. The full impact of the FAME scheme is yet to kick in as it was rolled out across the nation only from October 2015. Till then, it covered only 100 cities.

Activities in the Indian hybrid/EV market have picked up since last year. Car market leader Maruti Suzuki launched its hybrid technology with the midsize sedan Ciaz followed by the Ertiga. Electric two-wheeler market leader Hero Electric launched its first scooter with lithium ion battery technology. This was followed by the launch of S340, India's first 'smart' electric two-wheeler by Bengaluru based start-up company Ather Energy.

Though many players in the EV industry may have got an unpleasant surprise from the Finance Minister, the disappointment will not remain too long.

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