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

A customs duty exemption on select electric vehicle parts is a step that would incentivise the purchase of EVs. This, the FM said, has been done to facilitate a shift from fossil fuels to environment friendly fuels. (Image: PTI)

Various ministries including road transport and heavy industries have submitted “non-fiscal” recommendations to National Institution for Transforming India (Niti) Aayog to clear the road for electric vehicles under Faster Adoption of and Manufacturing of (hybrid and) Electric Vehicles (FAME) -II.

Official sources told Moneycontrol that uniform standard for charging station and tightening of fuel efficiency norms were part of those recommendations.

“A sub-committee was formed (for electric vehicles) and the recommendations were submitted to it,” the official said.

The suggestions were to use non-fiscal strategies to promote electric vehicles, he said.

Also read: Fin Min returns draft policy note for FAME-II; raises question over funding mechanism, policy structure

“These included immediate clarification of charging standards, establishing charging stations for range anxiety issues and tightening of fuel efficiency norms…,” he added.

It was recently reported that a committee of senior bureaucrats has recommended to the Niti Aayog to tighten fuel efficiency norms in order to shove auto-makers, manufacturing four-wheelers with combustion engine, to move towards EVs.

Government is also considering to adopt European electric charging infrastructure standard to promote EVs. It is used by German and American auto-makers and is accepted worldwide.

Government is also considering to push EVs by making it mandatory for cab aggregators to induct up to two to three percent of new fleet as electric coupled with nudging auto-makers to move away from internal combustion (IC) route.

He said that the government wants to have extensive network of charging stations across the country to remove infrastructural bottlenecks.

Moneycontrol had earlier reported that policy draft for FAME-II was returned by Finance Ministry over concerns related to monetary issues and future road map.

Also read: Government considers tightening fuel efficiency norms to promote electric vehicles

“Fin Min is worried about the final outcome… (Even though) Everybody is sure about bringing electric mobility in the country; the problem is, who will raise the money for it,” the official had said.

FAME-II was started in 2015 to incentivise buyers of electric vehicles. The scheme provides subsidies up to Rs 22,000 to buyers of two-wheeled vehicle, Rs 61,000 for three-wheeled vehicle and Rs 1,87,000 for four-wheeled vehicles.

The scheme was to expire in March 2017 but was extended for one year. Due to lack of policy consensus, the roll out of FAME-II has been postponed till September 2018.

The official said that the decision to withdraw monetary incentives on purchase of private electric cars was also part of the “non-fiscal” recommendation.

“This idea was pitched by Department of Heavy Industries (DHI)… The idea is that public transport runs more than private cars. If we have to leverage on electric mobility, we should focus on vehicles which ply more,” he said adding, “A private car runs for only 10-15 kilometers… So it doesn’t matter if it runs on petrol or electric… But cabs runs around 200 kilometers a day. So, if that is electric, it will make an impact”.

Also read: Centre scraps cash incentives for private EVs

The official, however, added whether the implementation of EV will be pan-India or few cities is still under deliberation. Niti Aayog bats for Centre to start by pushing electricity based public transport system in two or three cities while other ministries prefer pan-India implementation.

Centre has earmarked Rs 260 crore for FAME policy for FY 2018-19. It has also been reported that Rs 9,381 crore will be spent between 2018-19 and 2022-23 to promote EVs.