Centre's FAME-II scheme for EVs far away from its destination | Economic Times

Mumbai: The central government’s scheme to promote electric vehicles (EVs) through direct subsidies has attained just a tiny portion of its target half way through the three-year programme.The number of vehicles subsidised from April 2019 till the end of last month was fewer than 2% of the target for the scheme period, government data showed. The Phase II of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) in India scheme has a budget of ₹8,596 crore for giving subsidies alone, but just ₹77.3 crore, or less than 1%, of that was spent till the end of September. 78759891Industry insiders blamed stringent conditions, including high localisation and performance criteria for vehicles to qualify for the subsidies, for the poor response towards the scheme. These regulations made the EVs pricier than imported vehicles even after the subsidies, they said. The scheme has a total budget allocation of ₹10,000 crore, including towards developing charging infrastructure and administrative expenses besides subsidies on the vehicles.The funds given out till the end of September went towards subsidising 21,727 two-wheelers, 6,836 three-wheelers and 1,295 four-wheelers, data provided by the Department of Heavy Industries in response to ET’s query under the Right to Information Act showed.The scheme’s stated target is to support the purchase of 1 million two-wheelers, 500,000 three-wheelers, 55,000 cars and 7,090 buses with electric powertrain during the three-year period. The department’s response didn’t say whether the subsidised four-wheelers included e-buses.Meanwhile, several states led by Delhi are considering extending their own subsidies on top of the Centre’s scheme to make EVs cheaper, ET reported earlier this month. This could help boost the numbers in the second half of the scheme period ending March 2022.Electric two- and three-wheeler makers said while the government’s intent was in the right direction, there were several drawbacks in the scheme. “We knew from day one that FAME-II, despite all the good intentions, would not be able to achieve the stated targets,” Society of Manufacturers of Electric Vehicles director-general Sohinder Gill said.The government set several criteria like minimum speed and range for the vehicles for manufacturers to qualify for subsidies. The intent was to have the performance of EVs comparable to that of conventional vehicles to make the transition smooth for consumers.‘Regulations added to costs’The subsidies also came with strict conditions on sourcing of components locally, with the intention of making India a global EV manufacturing hub.These, however, pushed up the prices of the EVs and made them unaffordable for the masses, Gill said. “These regulations added substantial cost to the EVs, much more than the subsidies being offered.”For example, for an electric scooter with comparable performance to combustion-engine ones, the price remains above ₹1 lakh after the subsidy, which is around ₹20,000 depending on the size of the battery for a two-wheeler.Quicker localisation also pushed up costs, as manufacturers paid a relatively higher price to locally source components like motors and electronic parts. According to them, there was still not sufficient demand for EVs in India to make a business case for component makers to invest millions of dollars into building production facilities.“Perhaps the logic was right, but the timing was grossly wrong,” Gill said. Had the localisation criterion been more relaxed and implemented over a longer period, EVs would have been more affordable leading to more buyers, naturally making a business case for localisation, he said.