With the time period for the current FAME II scheme nearing completion in March 2024, industry has called for the continuation of the scheme for the next five years for enabling upfront near price-parity for EVs vis a vis ICE vehicle, and to help increase the adoption of EVs over the next few with a review at the end of three years. In a proposal submitted to the Ministry of Heavy Industries, FICCI draws attention to the risk of a sudden withdrawal or discontinuation of upfront price incentives which will lead to up to 25 per cent price increase of EVs. The Government has approved Phase-II of FAME (Faster Adoption & Manufacturing of Electric Vehicles ) with an outlay of Rs 10,000 crore for a period of 3 years commencing from 1 April 2019.
Highlighting the concern that a termination of FAME may derail EV adoption momentum substantially, also impacting further investments in EV sector, FICCI noted that purchase incentives on EVs are being continued in Canada, US, Korea, etc. to achieve their electrification ambitions and India cannot be left behind and miss the EV bus. The EV penetration in India is only 5 per cent currently. It is imperative to continue FAME scheme to achieve critical mass towards reaching overall 30 per cent EV penetration targets by 2030, as fixed by the Government and to also help meet ‘Panchamrit’/Net Zero climate action goals of India.
Based on the input received from its wide base of members comprising of various stakeholders from the EV sector, FICCI EV Committee has estimated that if demand incentives as suggested are provided for the next five years, it could support adoption of 30.5 million EVs across segments in the next 5 years and help achieve the target of 30 per cent electrification of India’s transport sector. Success of the PLI scheme introduced by the Government also depends on continued demand for EVs. Encouraged by FAME policy and growth in demand, several companies have invested to create new EV models and also components for EVs and sudden discontinuation of FAME could lead to not only reversal in demand growth but also in investments in EV sector, and to ‘Make in India’, FICCI says.