FAME-II scheme – ambitious vision, poor planning

24 July 2019 |

In March 2019, the Indian government announced the much-awaited phase II of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme after delaying its announcement for over two years. FAME-I was initially set until 2017 but was extended up to March 2019. FAME-II has a total budget outlay of INR 100 billion (USD 1.5 billion) until 2022 and focuses on public transport, demand aggregation and subsidies to encourage adoption of EVs.

FAME-I had a planned outlay of INR 8 billion in two years but only INR 5.8 billion was actually allocated in over four years. India’s EV market has been dominated by cheap, unregistered and uncertified three-wheelers. Two-wheelers and four-wheelers accounted for only 0.15% and 0.04% of total domestic sales respectively between FY 2015-19. FAME-II envisages a more holistic growth of the EV industry by providing support for essential building blocks including charging infrastructure, R&D and greater manufacturing indigenization.

Figure: Fund allocation under FAME India scheme, INR million

Source: Ministry of Heavy Industries and Public Enterprises

FAME-II proposes to spend INR 86 billion on upfront subsidies for purchase of EVs. Electrification of shared transport is rightly given a major push with buses to receive 40% of total subsidy amount (up to INR 5,000,000 per vehicle) and other commercial vehicles to receive 20% of total subsidy amount (INR 150,000). The jump in subsidy bill is large in comparison to FAME-I but it would still cover only 1.5 million vehicles until 2022 (2% market share).

NITI Aayog recently recommended phased introduction of commercial four-wheeler EVs rising from 2.5% in FY 2020-21 to 40% in FY 2025-26. It also recommended that all new vehicles sold 2030 onwards should be electrified. But with high cost of EV’s being a main market barrier and the Indian government being unable to support the market through a larger subsidy support, the target seems aggressive and unrealistic.

The recent budget has introduced some positive measures with a range of GST and direct tax benefits. But confusion about government targets for EVs is not helping the market. We believe that growth in the next few years would be restricted to public transport and fleet operators.

Back
"; ?>

Recent reports

India Solar Rooftop Market Analytics   

This report presents trends and observations from over 16,000 rooftop solar installations with an aggregate capacity of 2,265 MW in our database. It p...

Buy Report Download Executive Summary

Forecasting and Scheduling Regulations   

India’s central electricity regulator, the Central Electricity Regulatory Commission (CERC), issued an amendment to the Deviation Settlement Mechani...

Buy Report Download Executive Summary

India RE Map | September 2019

India added 9,327 MW of utility scale wind and solar capacity in the last 12 months. Total installed RE capacity is estimated at 66,650 MW as on 30 Se...

Download

India Solar Compass Q2 2019   

Q2 was again a slow quarter for the solar sector with new capacity addition coming in at only 1,104 MW, down 55% over previous quarter and 28% below o...

Buy Report Download Executive Summary

India Solar Map | June 2019

Indian utility scale solar capacity reached 26,154 MW as on 31 March 2019. Capacity addition fell to 4,810 MW in FY 2019, down a steep 47% over previo...

Download

India Solar Rooftop Map | June 2019

India is estimated to have added a record 1,836 MW of rooftop solar capacity in FY 2019. Rooftop solar continues to grow rapidly registering a growth ...

Download
Award winnig research
We use cookies to offer you an optimal user experience and collect information on website usage.