In a recent development, the Government Of India has announced that the FAME 3 scheme will be called PM E-Drive instead. The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) policy has over the years, subsidised the purchases of over 1.4 million electric vehicles. The new ₹10,900 crore subsidy scheme seems to have a catch.
It is not just the name that has changed about FAME. The revised policy almost hints at a potential end to the growth of electric car sales, by having removed all of their benefits. It has a strong focus on promoting the adoption of EVs in the public transport sector, especially on the sales of electric buses. Funds have also been allocated for the electric two and three-wheeler segments as well. It will also focus on further strengthening the charging infrastructure here.
Focus On Electric Buses
PM E-Drive will boost the adoption of electric buses in various cities. Demand incentives can be availed to deploy as many as 14,028 electric buses. Convergence Energy Solutions Ltd (CESL), a state-run organization has aggregated the demand for these in nine major Indian cities. The scheme provides a subsidy of ₹10,000 per kWh of battery capacity on each electric bus. It has a net outlay of ₹4,391 crores. Green public transport stays the biggest priority in PM E-Drive.
In an effort to reduce financial risks for bus operators, the government has also introduced a Payment Security Mechanism Fund (PSMF) of ₹3,435 crore. This fund will benefit operators of 38,000 electric buses, encouraging more players to adopt electric buses in public transport networks.
Rough Roads For Electric Cars?
The revised policy completely skips electric cars. No more notable benefits or subsidies apply to these, and the same is alarming to the passenger EV sector at large. The EV party seems to be more or less over in the passenger car space. The removal of government subsidies will likely push their prices up, making it worse for the already slow-paced segment. A rapid recovery seems to be unlikely unless manufacturers resort to cost-cutting measures like Battery As A Service (BAAS). The recently launched MG Windsor seems to have spearheaded the technology in the Indian mass market. Going the BAAS route can also enable manufacturers to achieve price parity between ICE cars and their corresponding EV counterparts.
Tata Motors, the current dominant player in EVs, have been pushing for more electric cab subsidies. These seem to have had fruits as incentives on electric cabs have been extended, but not the Electric Mobility Promotion Scheme (EMPS) which temporarily replaced it.
While the new policy could be upsetting for electric cars, hybrids could benefit from the same. Increasing acceptance and debut of advanced tech like Series hybrids, for example, give the impression that hybrid cars could flourish in the near future.
Subsidies For Electric Two-Wheelers And Three-Wheelers
The scheme also allocates ₹2,679 crores to boost the adoption of electric two-wheelers and three-wheelers. A total of 2.48 million electric two-wheelers and 316,000 three-wheeler EVs will qualify for these subsidies, providing a much-needed boost to these segments.Backed by the new policy, more startups could soon foray into the electric 3-wheeler space- in both passenger and cargo segments.
Incentives For Electric Trucks And Hybrid Ambulances
Recognizing the importance of clean vehicles in essential services, the government has also allocated ₹500 crore each for electric trucks and hybrid ambulances. The government has opted for hybrid ambulances rather than EVs to ensure total reliability. Trucks need to have a valid scrapping certificate from government-approved scrapping centers, to be eligible for these benefits.
Charging Infrastructure Development
₹2000 crores have been earmarked for the development and further strengthening of EV charging infrastructure here. The money will be used to install 22,100 fast chargers for electric four-wheelers, 1,800 fast chargers for electric buses, 48,400 fast chargers for two and three-wheeler EVs. These will be set up in cities with high EV adoption.
Digital Vouchers for EV Buyers
Availing the subsidies can be done by using government-issued digital vouchers. When purchasing an EV, buyers will receive an Aadhaar-authenticated e-voucher, which can be used to claim the subsidy. The voucher will be sent to the buyer’s registered mobile number and signed digitally by both parties. This system will make the workflow easier and the process more transparent.
Final Thoughts:
Increased subsidies on electric two-wheelers, three-wheelers and buses seem to be a move that deserves appreciation. The majority of India’s population depends on these for their daily commutes. Electrifying these could, thus bring about some real difference. Also, without subsidies, electric cars would now have to battle based on their merits. This will pressurize manufacturers to work harder in R&D to come up with better products.
