Auto Industry Calls for FAME III Incentives to Accelerate EV Transition in India

Current EV Adoption Landscape in India

According to Satyakam Arya, MD&CEO of Daimler India Commercial Vehicles, despite electric vehicles (EVs) constituting one in four global vehicle sales, their adoption in India remains modest. As of now, only 2% of passenger vehicles, less than 5% of two-wheelers, and around 15% of three-wheelers sold in the country are electric.

Need for Government Support

Arya emphasised the crucial role of government support and incentives in facilitating a sustainable transition towards electric mobility in India. He pointed out that even though the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme is set to conclude in March 2024, the nation has not yet overcome the challenges of low EV adoption.

Industry Experts Stress the Importance of Continued Government Support

Voices from the Global Investors Meet

During a panel discussion on sustainable mobility at the Global Investors Meet, auto industry experts emphasised the need for sustained government backing. Despite the impending expiration of FAME-II subsidies this year, top executives in the auto sector stressed the importance of ongoing support from the government.

Evolutionary Stage of Sustainable Mobility in India

Kamal Bali, Chairman of CII Southern Region, highlighted India's position in an evolutionary stage of sustainable mobility. He underlined that with steadfast government support, the country has the potential to localise electric vehicle production on a large scale, similar to what was achieved with internal combustion vehicles.

Also Read: Subsidy for Electric Two-Wheelers to Cease after FAME III Introduction

Divergent Views on FAME III Incentives

Government Support vs. Policy Shift

While major auto manufacturers advocated for continued government support, EV entrepreneurs called for a policy shift in the upcoming FAME III incentives.

Hema Annamalai, founder of Ampere (now a Greaves Cotton subsidiary), proposed that FAME III should focus on significant localization efforts.

She urged policymakers to ensure that the policy benefits not only help large players but also small and medium enterprises, emphasising the entrepreneurial nature of the EV industry.

A Call for Pragmatic Approach

Annamalai recommended viewing e-two wheelers as commodities and avoiding over-engineering. She suggested that a lightweight electric cycle equipped with a sodium-ion battery could be a viable solution, provided there is a Central Motor Vehicles Rules (CMVR) modification to promote low-speed electric vehicles for the masses.