Centre’s plan to promote electric vehicles is a step in right direction

Under the new scheme, which is going to be implemented over a three-year period, the government will incentivise purchase of electric vehicles

Gurugram is the most-polluted city and the National Capital Region (NCR) has emerged as the most polluted region in the world in 2018, as per the data released by IQAir AirVisual and Greenpeace.

Motor vehicles exhaust is the largest contributor to air pollution and is estimated to be responsible for 30% of PM2.5 concentration in the Delhi region. Electrification of transport is important for improved air quality. Therefore, it was surprising to see the uncertainties around electric vehicles, especially at the national level. But a lot changed last week when the Union cabinet finally approved the second phase of FAME India (Faster Adoption and Manufacturing of Electric Vehicles).

FAME India is the Government of India’s scheme to promote electric and hybrid vehicles. The first phase of the scheme (FAME 1) was launched in 2015 under the National Electric Mobility Mission for increasing the manufacturing and usage of electric and hybrid vehicles in India. Phase 1 was extended till March 2019 and phase 2 will start from April 2019.

Under the new scheme, the government will incentivise purchase of electric vehicles. The scheme will be implemented over a three-year period. While the details of the scheme are yet to come out, going by the reports in media it appears FAME 2 is much better planned than FAME 1. Let me give three examples how:

INCREASED ALLOCATION

The initial outlay for FAME 1 was ₹795 crore which was later on increased to ₹895 crore. The success of electric vehicles is a gamechanger because they have zero ‘tail-pipe’ emission and low maintenance costs. Therefore, considering the potential impact of this disruption, the ₹895-crore allocation was pretty meager to make any substantial impact.

In August last year, the interministerial panel on FAME 2 had finalised an outlay of ₹5,500 crore for a five-year period. Therefore, the new allocation of ₹10,000 crore under FAME 2 for a three-year period is highly welcome news. Electric vehicles (EV) cost anywhere between two to three times their conventional counterparts. However, in terms of lifecycle cost, these vehicles are already becoming competitive in many categories. Therefore, any support to over-

MEASURABLE TARGET

The famous management thinker, Peter Drucker, is often quoted as saying “If you can’t measure it, you can’t improve it”. This basically means that something cannot be called successful unless the success is defined in measurable terms and tracked.

The lack of measurable attributes are common in many government policies and schemes as it is often left to subjective opinions to gauge success and failure. However, FAME 2 in that regard is different as the government has a target to support over 15 lakh electric vehicles in India. This is pretty measurable.

In addition, the 15 lakh vehicle target is further split: 10 lakh would be electric two-wheelers, 5 lakh electric three-wheelers, 55,000 electric four-wheelers and 7,000 buses. This is totally in contrast to FAME 1, which was broadly to promote eco-friendly vehicles by offering incentives on electric and hybrid vehicles without any target, except for the plan outlay.

RIGHT STRATEGY

One of the strong feedbacks against FAME 1 was that it did not follow a right strategy. For example, replying to a question raised in the Rajya Sabha, it was revealed that till February 2017, the FAME 1 supported 1.11 lakh vehicles out of which 66% were mild hybrid cars and 30% were low-speed two wheelers with conventional batteries; fully electric vehicles were only 1%.

The government withdrew the subsidy on mild electric vehicles from April 2017 onwards.

Under the FAME 2 scheme, the government has rightly put focus of shared transport in case of 2- and 3-wheeler category, while in case of private vehicles the support has been extended to two-wheelers. As per the announcement, incentives will be given to three- and four-wheelers that ply as commercial vehicles or public transport, only. Private two-wheelers that intend to avail the benefit of this scheme need to be using advanced battery packs made of lithium ion or other advanced chemistries.

The auto sales data from 2012 to 2018 reveal that 80% vehicles sold are two-wheelers, passenger cars are 14%, the rest 6% is equally split between three-wheelers and commercial vehicles. Therefore, only 2% of our fleet are highend cars. Hence, we need a different approach—one that focuses on the segments that are most-used—to electrify of our transport fleet.

FAME 2 has used the right strategy, but the real test of its success will show in the implementation stage. No doubt, FAME 2 is worth celebrating at present. But, we need to remember that it’s only a start.

@amitbhatt4u (Amit Bhatt is the director- integrated transport, WRI India)