FICCI has submitted a proposal to Ministry of Heavy Industries for continuation of FAME scheme for the next 5 years, with a review at the end of 3 years. The time period for current FAME II scheme is till March 2024.
- The proposal emphasizes the need for enabling upfront near price-parity for Electric Vehicles vis à vis ICE vehicles, to help increase the adoption of EVs over the next few years.
- Sudden withdrawal or discontinuation of upfront price incentives will lead upto 25% price increase of EVs. This may derail EV adoption momentum substantially and impact further investments in the EV sector.
- Purchase incentives on Electric Vehicles are being continued in markets like Canada, US, Korea, etc. to achieve their electrification ambitions and India cannot be left behind and miss the EV bus.
- EV penetration in India is only 5% currently. It is imperative to continue FAME scheme to achieve critical mass towards reaching overall 30% EV penetration targets by 2030, stated by Government of India.
- FICCI EV Committee has estimated that if suggested incentives are provided, it could support adoption of 30.5 million EVs across segments and achieve the target of 30% electrification of Indian transport sector.
FICCI Recommendations Highlights:
- Subsidy support, in the form of upfront incentive in form of price reduction to EV customers, should ideally continue till EV penetration crosses a threshold value in each segment, and to allow critical mass to be achieved towards India’s stated goal of minimum 30% as a whole, to bring benefits of this technology to the masses.
- There can be a mid-scheme review at the end of 3 years, to assess the penetration achieved and calibrate the scheme or slabs of incentives.
- Technology: FAME 3 to continue with all xEV (SHEV, PHEV passenger cars) technologies as in FAME 2
- Upcoming green technologies which significantly aids carbon reduction i.e. hydrogen, fuel cells, may also be considered for certain incentives, post discussion with stakeholders.
- Vehicle segments: In addition to supporting demand creation for the priority segments of public transport (eBus, E3W, etaxi) and E2W, FAME-III may also include segments like MHCV (trucks); personal segment for e4Ws and private buses.
- Incentive calculation based on battery size may continue (per Kwh) as per FAME II.
- Localization: Manufacturing clauses under the Phased Manufacturing Program (PMP) can be continued, Continuation of other FAME II quality parameters.
- Maximum vehicle price eligibility criteria and Incentive cap as maximum percentage of vehicle price to continue towards supporting Affordable EVs.
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