India Government Removes Handbrake on Electric Vehicle Sales with FAME II

Despite being one of the world’s fastest growing automobile markets, the sales of electric cars in India actually retreated during the 2018 financial year to a mere 1,200 units, a decline of 40% from a year earlier, according to the Society of Manufacturers of Electric Vehicles (SMEV). Irrespective of more promising sales volumes of electric two-wheelers – 56,000 units in 2018 FY – India has been slow to embrace electric powertrains.

However, this could all be set to change in what is shaping up as an important year for the Indian automobile industry. On February 28, Union Minister Arun Jaitley confirmed that the India cabinet has approved USD 1.4 billion / Rs 10,000 to incentivise faster adoption of electric and hybrid vehicles, and to establish necessary charging infrastructure for electric vehicles. The Government hopes the move will have a sizeable impact on pollution and reduce dependency on fossil fuels.

The funding was released alongside phase two of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, originally launched on April 1, 2015. FAME II will be implemented over a period of three years with effect from April 1, 2019.

Incentives will be offered on the upfront purchase of electric vehicles, with the requirement that vehicles are fitted with advanced battery like a lithium-ion battery or other new technology batteries, to encourage advanced technologies.

The emphasis of the scheme will be on shared transport, with incentives for three-wheeler and four-wheeler segments mainly for public transport or registered commercial purposes. In the two-wheeler segment, the focus will be on private vehicles. About 2,700 charging stations will be established in metros, larger cities, smart cities and cities of hilly states across India, with a stated goal of at least one charging station in a grid of 3km x 3km.

The announcement of FAME II was met with approval from Indian automobile manufacturers. Mahindra & Mahindra (M&M) Managing Director Pawan Goenka told the Press Trust of India (PTI) that the scheme has removed policy uncertainty in the electric vehicles segment, and “therefore the OEMs (original equipment manufacturers) which are waiting and kind of watching will now probably come out and many more EVs could be launched in India”.