In a bid to promote the adoption of Electric Vehicles (EVs) and maintain price parity with Internal Combustion Engine (ICE) vehicles, the Federation of Indian Chambers of Commerce and Industry (FICCI) has proposed the extension of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme for the next five years. FICCI submitted its proposal to the Ministry of Heavy Industries, Government of India, emphasizing the critical need for upfront incentives to drive EV adoption.
The existing FAME II scheme is scheduled to conclude in March 2024, and FICCI suggests a seamless transition to FAME III, with a review after three years. The sudden withdrawal of upfront incentives could result in up to a 25% price increase for EVs, potentially hampering the momentum of EV adoption and disrupting investments in the sector.
FICCI highlights the success of ongoing purchase incentives in global markets like Canada, the United States, and Korea, stressing that India must not lag in the electric mobility revolution. Currently, EV penetration in India is at 5%, and FICCI underscores the importance of continuing the FAME scheme to achieve the government’s target of 30% EV penetration by 2030.
The FICCI EV Committee, drawing insights from a wide range of stakeholders in the EV sector, estimates that providing demand incentives for the next five years could support the adoption of 30.5 million electric vehicles across various segments. This aligns to achieve 30% electrification in India’s transport sector.
Key recommendations from FICCI include:
- Continued Subsidy Support: FICCI suggests continuing upfront incentives until EV penetration reaches a threshold value in each segment, ensuring critical mass for India’s goal of at least 30% overall electrification.
- Mid-Scheme Review: A mid-scheme review at the end of three years to assess penetration and calibrate incentive slabs.
- Technology Focus: FAME III should include all xEV technologies from FAME II, and explore incentives for upcoming green technologies like hydrogen and fuel cells.
- Expanded Vehicle Segments: In addition to supporting public transport and two-wheelers, FAME-III may include segments like trucks, personal electric cars, and private buses.
- Incentive Calculation Based on Battery Size: Continue incentive calculation based on battery size (per KWh) as per FAME II.
- Localization and Quality Standards: Continue manufacturing clauses under the Phased Manufacturing Program (PMP) and maintain other quality parameters from FAME II.
- Affordability Support: Maintain maximum vehicle price eligibility criteria and incentive cap as a percentage of the vehicle price to support affordable EVs.
Ms Sulajja Firodia Motwani, Chair of the FICCI EV Committee, emphasized the importance of continued government support through schemes like FAME III to bridge the price gap between EVs and ICE vehicles. She highlighted that FAME II has played a crucial role in spurring EV demand but stressed that the current price premium remains substantial. Ms Motwani expressed hope for continued government support, stating that the future of automotive technology is electric, and India’s leadership in the automotive sector depends on its dominance in EVs.
FICCI has formally submitted its proposal for FAME III to the Ministry of Heavy Industries, NITI Aayog, and other relevant authorities in the government. The proposal is crafted with inputs from the FICCI EV Committee, with YES BANK as the knowledge partner, and includes strategies from other countries, lessons from FAME I and II, and detailed calculations for the outlay of FAME III.
