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FAME India Scheme Will Have Major Fund Allocation for Electric Vehicle Infrastructure

FAME India Scheme Will Have Major Fund Allocation for Electric Vehicle Infrastructure

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The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II) scheme, since the time of inception in 2015, has achieved greater pace and just as the commencement of its second phase is around the corner, the scoop has come out that the second phase of this mega-development programme, estimated to be accomplished at a cost of Rs 5,500-crore will have a major proportion being allocated for the development of electric vehicle charging infrastructure alongside local manufacturing of lithium-ion batteries, which form the core of electric vehicles.

The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II) scheme, which is still awaiting a Union cabinet approval, will see light of the day when the first phase gets over in March 2019, after four extensions since the rollout in April 2015.

“Unlike the ongoing phase, when majority of the subsidy is provided on purchase of electric vehicles, the next phase will substantially cover the charging infrastructure as the government believes that EV programme cannot be successful without an optimum number of charging points,” the official told FE.

Under the scheme, while the government will provide atleast half the amount as subsidy, the remaining would come from private participation, the official said.

The move is part of the government’s effort to boost adoption of electric vehicles, which currently account for less than 1% of the total vehicle sales, with lack of charging infrastructure being the main deterrent.

The government aims to have around 1,000 charging stations initially and more subsidy for construction will expedite the process, thereby encouraging consumers and especially the fleet operators in transition to e-mobility.

It is also likely to give a boost to companies like ABB and Tata Power, among others, who are into construction of EV charging stations as one charging point entails an investment in the range of `3-25 lakh, depending upon the technology.

“In a developing country like India, where the unit cost of creating the infrastructure for charging stations is higher, it makes sense for a government agency to kickstart the roll-out. There is more work to be done in rationalising the tariffs as the rates notified in some states are high and will discourage adoption,” said Kameswara Roa, partner, Energy & Utilities, PWC.

According to a draft note prepared by the ministry of heavy industries, the government plans to have one charging station at every 25 km on major highways in the country.

The second phase of the FAME scheme was earlier slated for a rollout in October but got stuck after the PMO’s intervention, directing maximum incentives to be used for local manufacturing of lithium-ion batteries.

The scheme spanning for five years, when implemented, will offer subsidy to electric two-wheelers, three-wheelers, and four-wheelers, including taxis and electric buses, besides setting up of charging infrastructure. The ongoing scheme offers incentives of up to `29,000 for two-wheelers and up to `1.3 lakh for cars.

While the automotive industry has a host of ministries to answer to, a list that includes heavy industries, road transport, petroleum and power, the recent addition to the list, Niti Aayog is evaluating the proposals from various ministries, one being the financial support for construction of charging infrastructure.

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