FAME-II scheme to subsidise electric vehicles deferred as NITI Aayog, ministries fail to reach consensus on roadmap

Under the scheme, government provides subsidy up to Rs 22,000 on two wheelers, Rs 61,000 on three wheelers and Rs 1,87,000 on four wheelers.

Also read: Cabinet may soon consider FAME-II scheme with Rs 9,381 cr outlay

It has been learnt that that the government will take time before finalising the second phase of the policy. Another official said that ministries and NITI (National Institution for Transforming India) Aayog have suggested different plans to build environment for EVs in the country and consensus building is a problem right now.

“There are multiple issues… NITI Aayog says that we should start by pushing electricity based public transport system in two or three cities…They don’t agree with giving incentives on few two wheelers or few cars at hand,” he said, adding that ministries, on the other hand, want to push electric mobility pan-India by subsidising the vehicles.

One of the clauses under the proposed FAME-II scheme has also been a point of contention as it says that subsidy on four wheelers will be given at the rate of Rs 10,000 per kilowatt.

Also read: Here’s why Road min took U-turn on Electric Vehicles' policy

“The way FAME-II has been structured… it’s not going to benefit anybody,” said the official. “Apart from scooters, nothing will be sold”.

He said that the scheme talks about 20 percent subsidy or a subsidy of Rs 10,000 per kilowatt for car which is futile.

“An electric car, for example by Mahindra, has 14 kilowatt power which equals to a maximum subsidy of Rs 1,40,000. A car costing Rs 13 lakh with a subsidy of only Rs 1.4 lakh is not an attractive bid,” he explained.

Road to electric mobility has been bumpy ever since union minister for road transport and highways, Nitin Gadkari, aborted the plan to have a separate policy for EVs earlier this year. The policy was said to be in the offing for almost a year. While the minister first said that India will have an all-electric fleet by 2030, this deadline was later retracted by Centre saying that it expects to have 30-40 percent electric fleet in a decade.

Centre, however, has been trying to steadily build an environment for electric fleet in India.

Also read: Auto-makers relax! 2030 isn’t final for roll out of electric cars in India

Recently, government said that 30,000 slow charging stations and 15,000 fast charging stations will be set up over the next 3-5 years to improve electric infrastructure. It has also been reported that Rs 9,381 crore will be spent between 2018-19 and 2022-23 under FAME-II scheme, after cabinet nod is received. Government has also apportioned Rs 260 crore for FAME scheme in union budget for 2018-19.

Goods and Services Tax (GST) on two wheeled electric vehicles is levied at the rate of 12 percent, while it is 28 percent for three wheeled electric vehicle.

In  December last year, cabinet approved electric mode for public transportation system in 11 Indian cities namely Delhi, Mumbai, Ahmedabad, Bengaluru, Jaipur, Lucknow, Hyderabad, Indore, Kolkata, Jammu and Guwahati.