Introduction:

• Electric vehicles (EVs) are hailed as the future of mobility, considering its important role in containing carbon emissions and hold off global warming.
• India has an EV conversion policy in place. Last month, the Indian government announced the second phase of its Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME-2) scheme, aimed at weaning various modes of public transport off fossil fuels.

About FAME India Scheme and 1st phase of FAME

• FAME India Scheme [Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India] was implemented with the objective to support hybrid/electric vehicles market development and Manufacturing eco-system.
• The phase-I of the scheme was designed for a period of 2 years i.e. FY 2015-16 and FY 2016-17 commencing from 1st April 2015.
• However, the scheme, which was initially upto 31st April 2017, was extended upto 31st March, 2019 or till Notification of FAME-II, whichever is earlier.
• Department of Heavy Industry implemented FAME-1.
• The Phase-II of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME-India) Scheme proposes to give a push to electric vehicles (EVs) in public transport and seeks to encourage adoption of EVs by way of market creation and demand aggregation.
• Total outlay of Phase-I of the FAME-India Scheme was enhanced from Rs. 795 Crore to Rs. 895 Crore. However, Fund allocated was 580 crores.

FAME-2

• Under FAME-2, incentives are offered to manufacturers of three-wheelers, four-wheelers and buses that run on electric power.
• Department of Heavy Industry to implemented FAME-2.

Do you know?

• The latest guidelines issued by the department of heavy industries insist that to avail of the benefits under the scheme – Half of all EV components (especially, lithium batteries and charging units) must be manufactured within the country. (to boost domestic production)
• However, for local companies, it remains risky to invest a lot of money in plants to make such products without clarity on the specifications that are likely to become industry standards across the world.
• This is an emerging industry even for western countries or China. The Chinese government has provided generous tax incentives and subsidies to car makers and consumers alike to make things happen. It also restricted the sale of fossil-fuel cars. Its EV industry is set to boom.

India’s position

• India has no major firm making controllers, batteries or magnet motors; nor has sufficient lithium reserves. Therefore, EV success is hard and calls for an entirely new strategy.
• EVs are still too costly to replace fossil fuel vehicles in the broad consumer market.
• Local EV makers would be better off waiting for component standardization and then forging tie-ups with successful foreign players to achieve volumes and the viability granted by economies of scale.
• Instead of an incentive scheme that tries to electrify public transport systems and prod the local manufacturing of parts, Indian policy would achieve more by assessing the global state of play, working out which battery and motor designs will come to dominate, and then setting up a grid to support a market switchover bit by bit as EV costs fall.
• Also interchangeable batteries would ease the process, as would a reliable network of charging stations where drained batteries could be swapped with fully-charged ones in a jiffy, as a plug-in-and-wait model would demand too much patience.

Indian policy should finely calibrate interplay of regulatory and market forces. Premature electrification is best avoided. As of now, India’s goal of clearing its city streets of fumes looks a distant dream.