Tough FAME II norms see only 7 OEMs qualify for incentives

by Nilesh Wadhwa 04 Jul 2019


Even as the government drives ahead aggressively with its ambitious vehicle electrification programme, the road ahead is not as smooth as industry would desire. As is known, the second phase of the FAME (Faster Adoption and Manufacturing of Electric Vehicles in India) India Scheme kicked in on March 1, 2019 and saw the government earmark a bigger budget outlay of Rs 10,000 crore to accelerate adoption of EVs.

Exactly four months since then, the FAME II norms are turning out to challenging for most companies which were earlier benefitting from incentives under the first phase of the FAME Scheme. It is learnt that, at present, only seven OEMs are able to meet the stringent FAME II norms compared to the 29 registered eligible companies earlier.

Interestingly, of these seven OEMs selling FAME II-eligible products, the bulk of them are two-wheeler manufacturers, followed by three-wheelers and passenger vehicles. There is no commercial vehicle OEM yet. In addition, while the Central and State governments are keen to induct a large chunk of electric buses for public transportation across the country, none of the registered OEMs have a product (electric bus) that can meet the norms. On June 29, Kerala chief minister Pinarayi Vijayan announced an ambitious target of having 1 million EVs on Kerala roads by 2022, starting with a pilot fleet of 3,000 buses, 200,000 two-wheelers, 50,000 three-wheelers and 1,000 goods carriers.

The seven OEMs who have been able to meet the norms include Mahindra & Mahindra (high- and low- speed 3-wheelers and electric cars); Tata Motors (electric car); Kinetic Green Energy & Power (high- and low-speed 3-wheeler); Jitendra New EV Tech (electric two-wheeler); Okinawa Autotech (electric two-wheeler); Ather Energy (electric two-wheeler) and Ampere Vehicles (electric two-wheeler).

No subsidy for private electric car buyers
The FAME II scheme, which emphasises electrification of public transportation including shared transport, does not incentivise private buyers for electric four-wheelers. The scheme plans to support a million electric two-wheelers, 500,000 e-three-wheelers, 55,000 four-wheelers and 7,000 buses.

In terms of the challenges to meet the norms, industry sources feel that without a proper charging infrastructure and sustained demand in place, the high EV localisation norms will prove to be a difficult task to meet and justify.

Meanwhile, on June 21, in its meeting with some captains of industry, government of India think-tank NITI Aayog had asked OEMs to come up with a roadmap that would see a speedy offtake of electric two- and three-wheelers.

Read more: Revealed: Timeline for localisation of EV parts to avail FAME II subsidy

Definitions and criteria for EV vehicles in FAME II

95% of electric 2Ws sold in India to lose FAME II subsidy: CRISIL

FAME II good but not enough, says India Auto Inc at Two-Wheeler Industry Conclave

Heavy Industry Ministry scouts for 'Knowledge Partner' to promote FAME II