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NEW DELHI, 4 January 2023: The Indian government is set to bring about a revolutionary transformation in its transportation sector through the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME) initiative. FAME III, the proposed evolution of the existing scheme, is poised to replace 8 lakh diesel buses with electric counterparts, fostering environmental sustainability and bolstering the electric vehicle (EV) sector in the country.
Restructuring FAME: A Shift in Focus
Under FAME III, the Union Ministry of Heavy Industries contemplates crucial changes, including a 50% domestic value addition (DVA) requirement and the elimination of the phased manufacturing program (PMP). These alterations aim to enhance the scheme’s effectiveness and address concerns surrounding the misuse of government support.
Budgetary Adjustments and Industry Impact
The previous iteration, FAME II, allocated INR 10,000 crore to subsidize over 12 lakh electric vehicles by December 2023. Reports suggest a potential increase in resources for FAME II in the interim budget, pending finance ministry approval. FICCI’s proposed FAME III, estimated at INR 30,000 crore over the next 5 years, emphasizes the need to invest in building a robust e-mobility ecosystem.
Electric Bus Overhaul: A Comprehensive Strategy
In tandem with FAME III, the Indian government envisions a monumental shift by replacing 800,000 diesel buses with electric alternatives within the next seven years. This ambitious plan targets state transport undertakings (STUs), private operators, schools, and employee transportation, with a deployment goal of 2,00,000, 5,50,000, and 50,000 electric buses, respectively, by 2030.
Addressing Challenges and Future Prospects
To ensure the success of the electric bus initiative, ongoing discussions with stakeholders are underway to finalize the scheme’s details. The proposal aligns with the broader FAME incentive program, contributing not only to environmental goals but also nurturing India’s burgeoning EV sector.
Evolving Electric Vehicle Landscape
In 2023, the Indian automobile industry witnessed remarkable growth, with total sales reaching 23.9 million units. Electric vehicles, comprising two-wheelers and three-wheelers, saw a substantial increase, claiming a 6.38% share of total automobile sales. Notably, electric two-wheelers and three-wheelers dominated the market, accounting for 94.25%, while electric cars and commercial vehicles made up the remaining share.
FAME II Adjustments and Industry Accountability
Amidst the growth, the government adjusted FAME II incentives by reducing subsidies per kilowatt-hour of battery capacity. The move aimed at optimizing budget allocations while maintaining support for eco-friendly vehicles. Furthermore, investigations revealed non-compliance by certain two-wheeler manufacturers with PMP norms, leading to the recovery of wrongly claimed subsidies.
Conclusion
As India propels itself towards a sustainable and electric future, the FAME III scheme and the ambitious electric bus overhaul stand as pivotal milestones. With strategic budgetary allocations, industry accountability, and a focus on building a robust e-mobility ecosystem, the government aims to shape a transportation landscape that is not only environmentally conscious but also economically viable.
Image credit: Tata Motors
