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FICCI submits proposal for FAME III scheme to the Govt.

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FAME III will support the adoption of 30.5 million EVs across segments, and also help achieve the target of 30% electrification of India’s transport sector.

The Federation of Indian Chambers of Commerce and Industry (FICCI) has submitted its proposal to the Ministry of Heavy Industries for the continuation of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme.

FICCI has urged the government to continue the incentives offered for the faster adoption of EVs for the next 5 years, with a review at the end of 3 years. It is said that a sudden discontinuation of price incentives would lead to an increase in the prices of EVs by up to 25%. The current FAME II scheme is ending in March 2024.

EV penetration in India is only 5%. As per FICCI, it is imperative to continue the FAME scheme to achieve the overall target of 30% set by the government of India by 2030. It has been estimated that if demand incentives as suggested are provided for the next 5 years, it would support the adoption of 30.5 million EVs across segments, and also help achieve the target of 30% electrification of India’s transport sector. The incentives can be tapered down and eventually discontinued over the next 3-5 years as prices of batteries and EV components reduce further.

Key features of FAME III as recommended by FICCI:

  • Subsidy support, in the form of upfront incentive in the form of price reduction to EV customers, should ideally continue till EV penetration crosses a threshold value in each segment, and to allow critical mass to be achieved towards India’s stated goal of a minimum of 30% as a whole, to bring benefits of this technology to the masses.
  • There can be a mid-scheme review at the end of 3 years, to assess the penetration achieved and calibrate the scheme or slabs of incentives.
  • Technology:

-FAME 3 to continue with all xEV (SHEV, PHEV passenger cars) technologies as in FAME 2

-Upcoming green technologies which significantly aid carbon reduction i.e. hydrogen, and fuel cells, may also be considered for certain incentives, post discussion with stakeholders.

  • Vehicle segments: In addition to supporting demand creation for the priority segments of public transport (eBus, E3W, e-taxi) and E2W, FAME-III may also include segments like MHCV (trucks); personal segment for e4Ws and private buses.
  • Incentive calculation based on battery size may continue (per Kwh) as per FAME II.
  • Localization: Manufacturing clauses under the Phased Manufacturing Program (PMP) can be continued with the continuation of other FAME II quality parameters.
  • Maximum vehicle price eligibility criteria and Incentive cap as a maximum percentage of vehicle price to continue towards supporting Affordable EVs.

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