Cabinet Approves Second Phase of FAME Scheme with Outlay of Rs 10,000 Cr

The Union cabinet has approved the second phase of the FAME scheme with an incentive layout of Rs 10,000 crores.

The Union Cabinet chaired by Prime Minister Narendra Modi has approved the proposal for the implementation of the Rs 10,000-crore Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME-II) scheme for promotion of electric and hybrid vehicles in the country.

The scheme with a total outlay of Rs 10000 crores over the period of three years will be implemented with effect from 1st April 2019. This scheme is the expanded version of the present scheme titled ‘FAME I‘ which was launched on 1st April 2015, with a total outlay of Rs. 895 crore. The government gave at least 5 extensions before finally coming out with the second phase.

India has previously set a target to electrify 25-30% of its vehicles by 2030 and the main objective of the scheme is to encourage faster adoption of electric and hybrid vehicles by way of offering an upfront incentive on the purchase of electric vehicles and also by way of establishing necessary charging infrastructure for EV.

Key Highlights:

Demand Incentives on operational expenditure mode for electric buses will be delivered through State/city transport corporation (STUs).

In the 3W and 4W segment, incentives will be applicable mainly to vehicles used for public transport or registered for commercial purposes.

In the e-2Ws segment, the focus will be on private vehicles.

Through the scheme, it is planned to support 10 lakh e-2W, 5 lakhs e-3W, 55000 4Ws, and 7000 Buses.

To encourage advanced technologies, the benefits of incentives, will be extended to only those vehicles which are fitted with an advanced battery like a Lithium-Ion battery and other new technology batteries.

The scheme proposes for the establishment of charging infrastructure, whereby about 2700 charging stations will be established in metros, other million-plus cities, smart cities and cities of Hilly states across the country so that there is an availability of at least one charging station in a grid of 3 km x 3 km.

Establishment of Charging stations is also proposed on major highways connecting major city clusters. On such highways, charging stations will be established on both sides of the road at an interval of about 25 km each.

The incentives would be applicable only on vehicles costing less than Rs. 15 lakh. The average price of an electric car in India is now about Rs 10 lakhs. Cars typically have a battery up to 20 kWh, so the discount under the new scheme would be around Rs 2 lakh. The government also has plans for a Green Cess to discourage new car buyers from buying petrol cars.