Govt’s ₹10,000-cr scheme to promote electric vehicles fails to take off in its first year

The government’s push to incentivise the purchase of electric vehicles in India has failed to take off, with only a fraction of the targeted number sold in the first year of the three-year Rs 10,000 crore subsidy scheme.

The second phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME-2) looked to subsidise the purchase of 1 million electric two-wheelers, 7,000 electric buses and 55,000 electric and hybrid passenger cars in the three-year period starting April 2019.

However, only 13,490 two-wheelers, 2,300 electric cars and 600 electric buses got the subsidy benefit during FY20, according to the Society of Manufacturers of Electric Vehicles (SMEV).

Of the amount earmarked for the scheme, a sum of Rs 8,596 crore was allocated for demand incentive in the form of direct subsidy. Roughly 10 per cent of this was expected to be spent in the first year.

“FAME-2 hasn’t yielded the desired results in promoting electric mobility through direct incentives. Till date very few EVs have been able to get subsidies leaving a wide gap between the budgeted and actual spends,” said Sohinder Gill, director general of SMEV and global chief executive of Hero Electric.

Stakeholders said the strict localisation and technical criteria that the government introduced in the second phase of the FAME scheme from April 2019 was the reason for fewer vehicles being subsidised.

Only vehicles with over 50 per cent localisation and equipped with more expensive lithium-ion batteries were eligible for the subsidy. For two-wheelers, there was the additional requirement of a maximum speed of at least 40 kilometres an hour and a range of 80 kilometres per charge.

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