In a much needed fillip, the Cabinet Committee of Economic Affairs (CCEA) has approved a Rs 10,000 crore package for the second phase of Faster Adoption & Manufacturing of Electric (and hybrid) vehicles (FAME) scheme on February 28.
"Starting from 1st April 2019, the second package will continue for three years till 31st March, 2022," Union Finance Minister Arun Jaitley said.
Sources had told Moneycontrol that a meeting with officials from finance ministry and executive committee of finance (ECF) for FAME had taken place on February 25 to raise the allocation amount from Rs 5,500 crore to Rs 10,000 crore.
"The officials have approved to double the package for FAME for a period of three years," a source had said.
According to the proposal cleared by the cabinet, FAME II will focus on the electrification of public transportation including "shared transportation", incentives for an operational expenditure model for e-buses by state transport corporations.
The incentives will be applicable only for three and four-wheelers plying as commercial vehicles and public transport, with the incentives applicable for private two-wheeler vehicles that use advanced battery packs made of lithium ion.
"Through the scheme, it is planned to support 10 lakh electric two-wheelers, 5 lakh electric three-wheelers, 55,000 electric four-wheelers and 7,000 buses," the government said in its statement.
While close to 2,65,335 electric/hybrid vehicles have been supported through “demand creation” and various decisions related to “charging infrastructure and technological support” under phase 1, the second phase will focus only on public transport, acting as a dampener for private car manufacturers.
Moneycontrol had reported in August 2018 that the government was focusing on private 2 wheelers and public transport to increase penetration.
"Close to 54,800 two wheelers were sold in India In 2017… E-rickshaws were 0.8 million (eight lakh)…" a source had told Moneycontrol, adding that government is veering towards the promotion of “highly penetrated” vehicles.
"The focus was on buses and public transport, but the reports (released by NITI Aayog at various time intervals) reveal that their focus has shifted from buses to three wheeler as that’s where the penetration will happen,” another source added.
In response to the Parliament in early February, the Department of Heavy Industries had said that the scheme would focus on public transport, and supporting research and development.
“Through the second phase, the government proposes to give a push to electric vehicles in public transport and seeks to encourage adoption of EVs by way of market creation and demand aggregation,” the department said.
Moneycontrol had reported in January that the government was planning to adopt Operating expenditure (OPEX) model for electric buses.
"The leasing of electric buses should be done on OPEX model only in public-private partnership. There was also a proposal of implying accelerated depreciation on EVs,” multiple sources had told Moneycontrol.
The government has further decided to set up 2,700 charging stations across metro, million plus cities, smart cities and cities across hilly terrain.
"Establishment of charging stations are also proposed on major highways connecting major city clusters, where stations will be available at every 25 km," the statement read.
"To establish charging infrastructure, we are looking at certain cities and certain highways where density has been proposed and one fast charger should be available at every three kilometres," said Ajay Bhalla, secretary, ministry of power had told Moneycontrol.
"All the support system is linked to FAME-II," he said.
FAME scheme was started in 2015 to incentivise the manufacture of electric vehicles. Incentives up to Rs 22,000 were available for two-wheelers, Rs 61,000 for three-wheelers and Rs 1,87,000 for four-wheelers were provided. The scheme was initially implemented for one year, which was later given three extensions.