The government of India is looking to put an end to the Fame II scheme for electric vehicles. According to a media report, this could happen as early as the next fiscal year.
What is the Fame subsidy?
The Government of India wanted to increase the adoption of electric vehicles. Hence to help all the stakeholders, the Indian Government launched the FAME program. FAME stands for Faster Adoption and Manufacturing of Electric Vehicles in India.
Currently, under the Fame II subsidy, EV related firms can offer a discount up to 40 percent of the cost of locally manufactured vehicles. This amount is later claimed from the Government as subsidy.
However, it is reported that some companies have misused this subsidy by certain manufacturers. It is currently under investigation by the authorities. This could be one of the reasons for the scrapping of the Fame II subsidy.
Subsidy for EV makers going forward
All said and done, it is unlikely that the Government will stop offering subsidy for EV makers. EV are still at the early stages of development and are significantly more costly than their ICE counterparts. To make them viable, some form of cost reduction has to be offered by the authorities.
This is where the production-linked incentive program could come in. The PLI scheme is already in force for certain types of manufacturers. Component manufacturers who make advanced chemical cell (ACC) battery storage, electric vehicles and auto components are already covered by the PLI scheme.
The major favourable point for PLI is that benefits offered by the government are at the manufacturer’s side. This is quite unlike the Fame II wherein the subsidy amount is released at the time of sale of the vehicle to the purchaser.
Electric vehicles in India
EVs are gaining popularity in India across the segments. We have the two-wheeler category that covers small distances, usually inside cities. Then we have the cars which offer range of 150-300+ on a full charge. Even amongst EVs, the four wheeler segment has a wide range across the budget. Right from Tatas all the way up to Mercedes-Benz we have a host of electric vehicles. Then coming to electric commercial vehicles, we have the various city buses as well as intercity buses. Tata Ace and eTrio offer last mile goods vehicles that run of battery power.
Also Read – Zingbus & NHEV plan to expand intercity e-mobility.
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