Exclusive | DHI withdraws incentives for cabs, taxis; only electric buses to be subsidised under FAME-II due to poor fund allocation

DHI launched FAME-I in 2015 to provide subsidies on purchase of electric vehicles. Under the scheme, the government provided subsidy, for two years, up to Rs 22,000 on two-wheelers, Rs 61,000 on three-wheelers and Rs 1,87,000 on four-wheelers.

Also read: Exclusive | India moves closer to electric-powered public transport; Fin Min approves Rs 3.5K cr for 10 cities

The first phase of the scheme was due to expire on March 31^st 2017 but was extended by a year. Later, the scheme was given another extension of six months, to be applied till September 2018.

It has been learnt that heavy industries ministry decided to incentivise purchase of electric buses due to meagre fund allocation by finance ministry.

“According to an earlier proposal, National Institution for Transforming India (NITI) Aayog had proposed to have fully electric public transport in 10 cities. But the proposal required Rs 45,000 crore per city,” said another source. “This was not accepted by the finance ministry”.

Moneycontrol had earlier reported that union ministry of finance has finalised Rs 3,500 crore as the allocation under the second phase of FAME scheme.

“As an allocation of Rs 45,000 crore was a little too much, smaller amount was allotted… But this is too little to support electric infrastructure,” a source said.

“While further discussions are being done, this has been finalised for now,” sources said. DHI is expected prepare the policy for cabinet approval in two to three weeks’ time.

FAME-II scheme has been dragging its feet in the policy corridors due to lack of consensus among stakeholders. While NITI Aayog wanted to have electric infrastructure in select cities, DHI wanted a pan-India implementation.

It had sought about Rs 12,256 crore for the second phase of scheme, which too wasn’t approved.

Also read: Govt mulling ‘non-fiscal’ measures under FAME-II to promote electric vehicles

The previous policy note formulated by DHI had set aside Rs 450 crore for high speed two-wheelers, Rs 300 crore for low speed two-wheelers, Rs 100 crore for light commercial vehicles and Rs 2,500 crore for buses. An incentive of Rs 20,000 per kWh will be provided to buses under the second phase of the scheme.

Centre has shifted its focus to non-fiscal incentives to nudge the adoption of electric fleet in the country. These included tightening of fuel efficiency norms, green number plates for electric cars, standardisation of charging standards and shoving cab aggregators to include a certain percent of electric cars in their fleet.

Government has also decided to set up close to 30,000 slow and 15,000 fast charging stations over the next three to five years.

New Delhi intends to increase the penetration of electric vehicles from current one percent to at least 40 percent by 2030; specifically under the new models segment being sold after 2030. This target translates to 4 million electric cars considering India becomes 10 million cars a year market by 2030.

Of the one percent EVs in India, 95 percent are low-speed scooters. Furthermore, against three million fuel based cars in India, there were merely 2,000 electric cars in 2016-17. The number stands at 23,000 for e-scooters against more than 16 million fuel based two-wheelers.