This new move by the Government can be described as the biggest push to encourage sales of electric and hybrid vehicles in India. Under a unique and innovative scheme named as FAME, Government will provide incentives upto Rs 1.38 lakh for every electric car sold.
Union Minister of Heavy Industries and Public Enterprises, Anant Geete, launched Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) aiming at promoting and encouraging sale of electric and hybrid vehicles.
The launch program of this scheme was organized by The Department of Heavy Industry (DHI) under the Government of India, along with the Society of Indian Automobile Manufacturers (SIAM).
It was announced that the Government aims to bring 6-7 million (60-70 lakh) electric and hybrid vehicles on road by 2020. For the next 5 years, the ministry has estimated that Rs 14,000 crore would be required to successfully implement the scheme. As of now, Rs 795 crore has been allocated which will be utilized under Phase 1, which has been again broken down into two 1-year period: 2015-16 and 2016-17. Out of Rs 795 crore budget, Rs 500 crore would be utilized for giving incentives alone.
The Incentive Scheme & Budget Allocation
Government has broken down the incentives program into several divisions for both battery operated and/or hybrid models. Here are the details:
- Rs 1800 to Rs 29,000 for Two Wheelers
- Rs 3300 to Rs 61,000 for Three Wheelers
- Rs 1.3 Rs 1.38 Lakh for Four Wheelers
- Rs 17,000 to Rs 1.87 Lakh for Light Commercial Vehicles (LCV)
- Rs 34 Lakh to Rs 66 Lakh for Buses
In order to be transparent, Minister Geete also provided a details breakdown of the usage of Rs 795 crore budget which will be spent in the next 2 years:
| Components of the scheme | 2015-16 | 2016-17 |
| Technology Platform(Including testing infrastructure) | Rs 70 cr. | Rs 120 cr. |
| Demand Incentives | Rs 155 cr. | Rs 340 cr. |
| Charging Infrastructure | Rs 10 cr. | Rs 20 cr. |
| Pilot Projects | Rs 20 cr. | Rs 50 cr. |
| IEC/Operations | Rs 5 cr. | Rs 5 cr. |
| Total (Rs.) | Rs 260 cr. | Rs 535 cr. |
| Grand Total (Rs.) | Rs 795 cr. |
Hierarchy of Schemes
4 years back, the Union Cabinet had formulated the National Mission on Electric Mobility (NMEM) to encourage the sales and manufacturing of electric vehicles in India. Under this, two bodies were formed: National Council on Electric Mobility (NCEM; operating at the Ministerial level) and National Board on Electric Mobility (NBEM; operating under Secretary level).
Last year, Government had hired an external agency named Booze & Co. to finalize the road map for expanding electric and hybrid vehicles sale in the country, and based on the recommendation of this agency, Modi Govt. had allocated a budget of Rs 795 crore under the annual budget.
Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) is the new blueprint for providing incentives under NMEM.
Implementation of FAME
To cover the whole country, the ministry has divided the implementation into 4 broad sections:
- Smart cities (All cities which are being currently converted into smart cities)
- 6 major metropolitan cities: Delhi-NCR, Greater Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad.
- Cities where more than 1 million citizens reside
- All cities of North East
The reimbursements shall be provided directly to the end customer from the manufacturers, who will receive the funds from DHI. This scheme will only cover those cars which are manufactured and/or assembled inside India. Imported electric and hybrid cars are not covered under this scheme.
In 2013, we had reported that TATA and Maruti can jump into electric cars as there were signals that Government may introduce some incentive based schemes in this sector; and the news proved right. Not only will the automobile industry as a whole will get benefited but it will also help in reduction of pollution and saving fuel.
As per rough estimates, if 6-7 million electric vehicles are able to run on Indian roads by 2020, then 9500 million litres of fuel would be saved, the value of which is Rs 62,000 crore (at the rate of Rs 64.95 / litre)
A big step for Indian automobile industry.
Here is the full press release with further details of pilot projects and more.
Will you consider buying an electric car after this announcement of electric car incentives or petrol/diesel based cars will be your top priority? Please reply by commenting right here!