FAME II BUDGET BOOST, ELECTRIC TWO-WHEELERS’ SALES UNAFFECTED

To give a further push to clean mobility in the country, the Ministry of Heavy Industries has enhanced the scheme outlay of Phase II of FAME India scheme from ₹10,000 crore to ₹11,500 crore. There are two riders though – first the scheme is fund and term limited that is the subsidies for demand incentives will be eligible for e-2wheeler, e-3w and e-4w sold till March 31 March 2024, or till the time funds are available, whichever is earlier. The Government also lowered the EV subsidy per unit to 15 per cent of the ex-factory price from 40 per cent for e-2ws under the FAME India Phase-ii keeping in mind the increasing penetration of the EV market. This has been implemented after stakeholder consultation meetings with OEMS of e-2w and the approval of the project implementation and sanctioning committee (PISC) for FAME

Phase II.

However, in a positive development and contrary to the perception that limiting subsidy would adversely impact the EV industry, inputs received from Ministry of Road Transport and Highways indicate that no slowdown has been observed in the sale of electric two wheelers in the country after subsidy reduction per unit to 15 per cent of the ex-factory price from 40 per cent for e-2ws under FAME India scheme Phase-ii. A total of 7,34,760 units of E-2 wheelers have registered for FY2324 as on 6 February, 2024, as per government data.

The Government is already implementing two Production Linked Incentive (PLI) schemes to boost manufacturing of EVS in India and increase in export -- National Programme on Advanced Chemistry Cells (ACC) Battery Storage’ in order to promote manufacturing in the country with budgetary outlay of Rs 18,100 crore to establish a cumulative ACC battery manufacturing capacity of 50 GWH and PLI scheme for Automobile and Auto Component Industry with a budgetary outlay of Rs 25,938 crore, which provides financial incentives to boost domestic manufacturing of advance automotive technologies (AAT) products (including EVS and their components.

“Disruption is happening in electric vehicles and our automakers have performed brilliantly over the years. Today, we are at a transition point, and this is our opportunity globally,” notes Kamran Rizvi, Secretary, Ministry of Heavy Industries, indicating Government’s willingness to sit down with the industry and create a 10-year blueprint for the auto industry to understand the global market, produce global-quality products, create synergies within the industry, and promote R&D, to leave a mark on a global level. While the recent interim Budget may have announced allocation of dedicated funds to promote EV manufacturing and charging infrastructure, demonstrating a clear push towards electric mobility, India’s EV original equipment manufacturers (OEMS) and battery swapping technology manufacturers see potential roadblocks in this transition.

One key issue relates to alternate charging options. “The government’s focus on investing in EV charging infrastructure development is a commendable step towards promoting electric mobility,” agrees Horace Luke, Founder & CEO of Gogoro but wants Government to also facilitate the growth of the EV eco-system by addressing issues like range anxiety through policy interventions, including battery swapping, for which there should ideally be separate allocations going forward. “With the ambitious goal of achieving an 80 per cent EV adoption rate by 2030, it is important to ensure that all aspects of EV infrastructure, including battery swapping, are adequately supported,” says Luke. ‘Range anxiety’, currently at large among many existing and potential EV customers, relates to the distance an EV can cover in a single charge and the availability of charging infrastructure. A series of recent brainstorming sessions hosted by the Society of Indian Automobile Manufacturers (SIAM) has also seen industry flagging a slew of similar concerns as well as EV financing. On charging infrastructure, Pawan Mulukulta, Executive Director, WRI India emphasizes on charging for two-wheelers with standardisation of connectors, and an open digital network for customers to access charging and awareness which can help penetrate the electric two-wheeler and three-wheelers in India. Vinod Aggarwal, President, SIAM and MD & CEO, VE Commercial Vehicles points out industry efforts aligned with the Government’s decarbonizing measures. “SIAM has launched initiatives like ISTEM for decarbonized mobility, professional stakeholders are interacting on a previously unheard scale and we have intensified our efforts to collaborate on knowledge transfer, technical development, and the adoption of alternative fuels. Penetration is also contingent on EV financing. Sameer Aggarwal, CEO, Revfin, points out that the challenges with EVS arise because the segment is not fully developed, including the non-existence of a secondary market and the availability of infrastructure for financing EVS. “We can create partnerships between all stakeholders to mitigate all risks associated with the financing of EVS,” says Aggarwal. Chairman, SIAM 2W CEOS Council and Director & CEO, TVS Motor K N Radhakrishnan puts emphasis on investment in technology development, supply chain building a talent pool with Government support as EV presents a huge opportunity for India to become a significant exporter. Amit Kalyani, Joint Managing Director, Bharat Forge suggests that India should diversify advance chemistry cell options and reduce dependency on only one type of fuel cells of electric mobility.