The FAME scheme: Accelerating change in India’s two-wheeler industry
The current reality is that India’s transport sector is heavily reliant on fossil fuels (the transport sector accounts for 13.5% of India’s energy-related carbon dioxide emissions). The year-on-year increase in India’s transport market, driven by urbanization, population growth, and economic growth, has increased crude oil imports.
This heavy reliance on imported fuel does not bode well for the Indian automobile sector and its stakeholders (basically, all Indian citizens), as the use of fossil fuels has some negative consequences.
The environment is contaminated, the economy suffers as a result of high export costs, and India is ultimately unable to develop toward its primary goals of self-reliance and sustainability.
As a result, the FAME plan represents a golden chance to encourage the adoption of electric and hybrid vehicles in India, with the ultimate goal of reducing the country’s reliance on fossil fuels, reducing air pollution, and minimizing the effects of climate change.
The Ministry of Heavy Industries and Public Enterprises launched the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) scheme in 2015 as part of the National Electric Mobility Mission Plan in order to increase the penetration of hybrid and electric vehicles (EVs) in India.
With the goal of converting at least 30% of total transportation to EVs by 2030, the scheme has emerged as a beneficial solution to support the development of the EV market and manufacturing ecosystem (which, unfortunately, is still in its infancy), spark change in India’s automotive industry, and ensure that India is on track to meet its goal of net-zero carbon emissions by 2070.
Consumers already have a favorable attitude towards and a high degree of awareness about electric mobility, which has been aided significantly by the rise in fuel and diesel prices.
As a result, when the FAME scheme’s incentives reach consumers, they have the potential to significantly improve the penetration and acceptance of electric two-wheelers.
The FAME initiative solves two significant customer concerns about purchasing and using two-wheeler EVs: cost and feasibility.
Subsidies are granted on the vehicle’s production cost, which is mostly determined by the cost of the battery. When this, along with other incentives, is passed down to customers, it will enhance their proclivity to buy.
In terms of practicalities, the construction of a comprehensive charging station network (FAME II seeks to build 2700 charging stations across the country in metros, smart cities, and mountainous regions) is certain to inspire consumer confidence.
The Centre approved Rs 800 crores under phase II of the FAME scheme for the development of fast-charging public stations in March 2023. This figure could rise with the active participation of governmental and private sector units.
The FAME scheme will also contribute significantly to India’s goal of reaching self-sufficiency. The incentives provided to original equipment manufacturers (OEMs) under the FAME plan would help improve domestic manufacturing capacity and technology, lowering the need for EV component imports.
The FAME program has brought in fresh faces to the two-wheeler EV manufacturing industry, and even existing firms are showing interest. Several startups have established manufacturing divisions and are on their way to national expansion.
Ambitious plans have been made and subsequently carried out, frequently as a result of the FAME scheme’s benefits. Initiatives like the FAME initiative are so urgently needed. Because of their relative cost and ease, two-wheelers have always led the way in terms of growth and penetration among the major vehicle categories in India.
Because EVs represent the future of mobility, efforts should be made to achieve a similar degree of market penetration for electric-powered two-wheelers. Accordingly,
The Indian government has taken moves in this direction. In addition to the FAME plan, the government approved a production-linked incentive (PLI) scheme for the construction of advanced chemistry cells (ACCs) in 2021 to cut electric battery prices. Furthermore, the GST on electric vehicles was decreased from 12% to 5%, while the GST on chargers/charging stations was reduced from 18% to 5%.
Together, such policies have the potential to cause a paradigm change in the ecosystem in terms of renewable energy use, manufacturing indigenization, and consumer acceptance of new and creative technology.
Join All India EV Community on LinkedIn