Parliamentary Panel Suggests Extending FAME Program for EVs by Two Years

A parliamentary committee has recommended extending the Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME-II) program by two years beyond its current March 31, 2024, deadline. The panel added that it would allow more time to evaluate its effectiveness and make necessary adjustments to promote electric vehicles (EVs).

The committee found that removing government support for EVs would significantly increase their prices. Many startups involved in the EV industry may also have to shut down once the FAME-II program ends.

The suggestions were part of the Twenty-sixth Report of the Committee regarding the assessment of the EV policy in relation to the Ministry of Heavy Industries (MHI), which was submitted to the Lok Sabha last week.

The committee has also recommended that the government create a comprehensive national EV policy, including successful state models and international best practices on charging infrastructure, battery swapping, battery waste management/recycling, and public awareness.

The policy should also provide demand and supply-side incentives such as reduced GST, waived road tax and registration fees, and discounted hire-purchase program with lower interest rates for purchasing EVs by financial institutions.

The committee further recommended introducing a comprehensive FAME-III program once the extended period of FAME-II is over to continue promoting EVs until they can compete with internal combustion engine vehicles without requiring incentives in terms of upfront costs.

The committee believes that the government should promote not only EVs and hybrid vehicles, but also other technologies, such as flex-fuel vehicles, hydrogen internal combustion engines, and hydrogen fuel cell vehicles, with a greater emphasis on mobility transition.

It said that a roadmap for establishing solar charging stations should be developed in a time-bound manner to reduce reliance on coal-generated electricity.

The Production Linked Incentive program for automobile and auto components offers incentives to overcome disabilities in manufacturing advanced automotive technology. The program has a budgetary outlay of ₹259.38 billion (~$3.1 billion) spread over five years from 2022-2023 to 2026-2027.

The committee suggested that it should be mandatory for beneficiaries to continue their production until at least 2030.

As the number of EVs being used in the country continues to rise, there is a need to address the safe disposal and/or reuse of batteries, along with the requirement for skilled manpower. The committee suggested that the e-waste management rules should be modified and elaborated further to facilitate the disposal and/or re-use of EV batteries.

The panel noted that the number of EV charging stations sanctioned under FAME is very low, considering that India has the world’s second-largest road network.

As the number of EVs increases, the committee suggested that frequently placed smart charging stations would make long-distance travel smoother and faster for EVs. The MHI should collaborate with other ministries and charging infrastructure operators to develop a comprehensive plan for the rollout of a nationwide public charging network.

The committee also recommended considering implementing purchase subsidies and cash-incentive schemes for scrapping/exchanging petrol/diesel vehicles for EVs. This would lead to faster adoption of EVs and have a significant impact on controlling CO2 emissions.

Recently, a new BloombergNEF study found total investment in EV chargers is set to cross $100 billion in 2023, and the next $100 billion of spending is expected to be achieved within the next three years.

Electric vehicle sales in India reached a record one million units in 2022, a jump of over 300% against the 322,877 units sold in 2021.

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