Customers can benefits on EVs till 2027 with FAME Scheme Extension | Know details

The parliamentary committee proposes a FAME scheme extension till 2027, emphasizing private EVs and four-wheeler support. Recommendations cover subsidies, GST reduction, charging stations, and tax benefits, crucial amid uncertainty.

Key Highlights: -

• Propose FAME scheme extension till 2027.

• Include private EVs and boost four-wheeler support.

• Covers subsidies, GST reduction, charging stations, tax benefits.

• Report amid uncertainty; FAME-II extension crucial.

• Call for sustained incentives to meet 2030 EV targets.

Electric Vehicle Adoption: Parliamentary Committee's Recommendations

In a bid to accelerate the adoption of electric vehicles (EVs) across India, the department-related parliamentary standing committee on industry has proposed a comprehensive set of recommendations aimed at extending and expanding the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme. 

The 324th report, presented in the Lok Sabha on December 20, calls for an extension of the FAME scheme by 'at least three more years,' till 2027, and advocates for a broader inclusion of EVs under the subsidy umbrella.

FAME-II Extension and Scope Expansion

The committee recommends increasing the number of EVs supported in the four-wheeler category and expanding the FAME-II scheme to include privately-owned electric cars. Currently, the FAME-II incentives cover only the electric cars for commercial-use with an ex-factory price of Rs 15 lakh or lower. The report underscores the significance of four-wheelers in the automotive sector, emphasizing the need for a more inclusive approach.

Reviving Electric Two-Wheeler Sales

The report highlights the negative impact of subsidy reduction on electric two-wheeler sales, particularly after the subsidy on electric two-wheelers was reduced from Rs 15,000 per kWh of battery capacity to Rs 10,000, round off at 15 percent of the model's ex-factory price starting June 1, 2023. 

To address this, the committee recommends a full restoration of subsidies for electric two-wheelers and suggests potential budget enhancements to meet the EV penetration targets by 2030.

Comprehensive Recommendations for EV Ecosystem

The parliamentary standing committee goes beyond the extension and expansion of the FAME scheme, presenting a holistic set of recommendations. These include subsidizing electric quadricycles, reducing the Goods and Services Tax (GST) on lithium-ion batteries, lowering road tax for EVs, establishing charging stations in suburban and rural areas, formulating a stable battery swapping policy, and extending the Section 80 EEB of the Income Tax Act 1961, allowing the tax savings on interest that's paid on the EV purchase loans until March 31, 2025.

Uncertainty Surrounding FAME-III

The committee's recommendations come at a crucial time as uncertainty looms over the proposed extension of the FAME scheme, tentatively named 'FAME-III.' If not extended, the FAME-II scheme, scheduled to conclude on March 31, 2024, could lead to the withdrawal of the central subsidies on the EVs. This scenario would likely result in a significant price increase, especially impacting the electric scooters and motorcycles.

Also Read: In a Move Towards Net-Zero, Mahindra Teams Up with Attero For EV Battery Recycling

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Verdict

The parliamentary standing committee's report underscores the importance of sustained incentives and policy support to propel India towards achieving its ambitious EV penetration targets. The ball is now in the government's court to consider and implement these recommendations for a greener and more sustainable automotive future.