Print Friendly, PDF & Email

FAME II subsidy for electric vehicles at only 52% of its target

GS Paper 3

 SyllabusInfrastructure/Manufacturing sector

 

Source: Business Standard, DTE

 Context: The parliamentary standing committee on heavy industry highlighted that Phase 2 of the FAME scheme to subsidize electric vehicles has achieved only 51.96 per cent of its target.

  • In related news, the Committee on Estimates (2022-23) for the evaluation of electric vehicle policy under the Union Ministry of Heavy Industries suggested an extension of the FAME II scheme. 

 

Issues highlighted in the committee report

  • Massive dependence on oil imports and Internal Combustion Engine (ICE) vehicles causes air pollution and greenhouse gases.
  • Slothy progress in both physical and financial targets.
  • EV charging stations are sanctioned only for a few cities.

 

Suggestions

  • Boost charging infrastructure.
  • The scheme should be extended further with new targets, incentives, and measures.
  • Place greater emphasis on implementation and extend the subsidy to private vehicles.

 

Lessons from China:

  • China’s experience with promoting electric vehicles (EVs) by offering generous subsidies in 2009, became costly for the government due to the large price differential and a number of buyers.
  • So, it phased out subsidies in 2020 and imposed a mandate on car manufacturers to ensure a certain percentage of all vehicles sold each year are battery-powered.
  • To avoid financial penalties, manufacturers must earn a stipulated number of points based on range, energy efficiency, and performance.
  • An academic paper published recently suggested that the phase-out policy is the most cost-effective approach to promote EV sales compared to other policies that provide larger subsidies over more extended periods.

 

About FAME Scheme:

BackgroundFAME India is a part of the National Electric Mobility Mission Plan. The main thrust of FAME is to encourage electric vehicles by providing subsidies. The FAME India Scheme is aimed at incentivising all vehicle segments.
Phases of the schemePhase I: started in 2015 and was completed on 31st March 2019. Phase II: started from April 2019, and completed by 31st March 2022.
Technologies covered by the schemeHybrid & Electric technologies like Mild Hybrid, Strong Hybrid, Plug-in Hybrid & Battery Electric Vehicles.
Monitoring AuthorityDepartment of Heavy Industries, the Ministry of Heavy Industries and Public Enterprises.
Four focus areas of the schemeTechnology development, Demand Creation, Pilot Projects, Charging Infrastructure.
Objectives of the FAME SchemeEncourage faster adoption of electric and hybrid vehicles by way of offering upfront Incentives on the purchase of Electric vehicles.

Establish necessary charging Infrastructure for electric vehicles.

Salient features of Phase IIEmphasis on electrification of public transportation, including shared transport, in the FAME India Scheme.

Incentives are applicable mainly to vehicles used for public transport or registered for commercial purposes.

The benefits of incentives will be extended to vehicles fitted with advanced batteries like Lithium-Ion batteries.

 

Insta Link:

FAME-India Scheme