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Home » Industry Analysis » Government’s `10,000-crore scheme to promote EVs fails to take off in first year

Government’s `10,000-crore scheme to promote EVs fails to take off in first year

May 4, 2020 5:53 pm

Government’s `10,000-crore scheme to promote EVs fails to take off in first year
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The government’s push to incentivise the purchase of electric vehicles (EVs) in India has failed to take off, with only a fraction of the targeted number sold in the first year of the three-year `10,000 crore subsidy scheme. The second phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME-2) looked to subsidise the purchase of 1 million electric two-wheelers, 7,000 electric buses and 55,000 electric and hybrid passenger cars in the three-year period starting April 2019. However, only 13,490 two-wheelers, 2,300 electric cars and 600 electric buses got the subsidy benefit during FY20, according to the Society of Manufacturers of Electric Vehicles (SMEV).

Of the amount earmarked for the scheme, a sum of `8,596 crore was allocated for demand incentive in the form of direct subsidy. Roughly 10 percent of this was expected to be spent in the first year. Stakeholders said the strict localisation and technical criteria that the government introduced in the second phase of the FAME scheme from April 2019 was the reason for fewer vehicles being subsidised.

Only vehicles with over 50 percent localisation and equipped with more expensive lithiumion batteries were eligible for the subsidy. For two-wheelers, there was the additional requirement of a maximum speed of at least 40 kilometres an hour and a range of 80 kilometres per charge. Consequently, only 13,490 two-wheelers availed of the subsidy in FY20, even as total electric two-wheeler sales grew to 152,000 units. Comparatively, 70,486 electric two-wheelers of the 126,000 units sold in FY19 got the incentives.

Experts said there was a gap between the government’s strict technical criteria and the readiness of the market. The government wanted to disincentivise EV makers who simin.

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