Bijoy Mehta

14th January 2020

Top 5 Things You Need to Know About FAME-II

FAME II: Helping India ride the electric wave

There’s big news in the electric mobility sector in India this month! 4 years after it’s predecessor, FAME Phase II has been launched by the Government of India.

Earlier this month, the Cabinet cleared Rs. 10,000 crore for Phase II of ‘Faster Adoption and Manufacturing of Hybrid and Electric Vehicles’ i.e. FAME.

Applicable from April 1st 2019, this scheme is an optimistic effort in pushing EVs from the nascent stage to mainstream users, helping India reach a target of at least 15% of all vehicles to be EVs in the next 5 years.

Here are the top 5 things you need to know about FAME II:

1. What is the primary objective of this scheme?
This scheme is announced to promote faster adoption of electric and hybrid vehicles in India, especially public transport and commercial vehicles. While this scheme emphasizes 3 and 4 wheelers, privately owned 2 wheeler EVs are also covered. Subsidies to be granted are calculated as per the battery capacity of the EV. A uniform demand incentive of Rs. 20,000 per kWh for buses and Rs. 10,000 per kWh for all other electric vehicles (including PHEV and hybrids) has been set.
Another notable feature of this scheme is the development of a network of charging infrastructure across the country.

2. Who else is targeted in this scheme?
Although the direct beneficiaries are the buyers and vehicle manufacturers/suppliers, there are other targets too. Since this scheme aims to foster innovation, the incentives are given only to vehicles with ‘Advanced Batteries’ fulfilling certain performance criteria. Hence, it will boost R&D and manufacturing investments in advanced battery technologies, helping build an electric mobility ecosystem by encouraging local manufacturing of electric vehicles and their batteries.

Currently, shared mobility service operators and last-mile connectivity operators are making their mark in India. As of 2018, 3.5 million rides are taken daily across India, including auto-rickshaws, bikes and cabs, through ride hailing services FAME 2 could encourage these ride-hailing services to switch to EVs for their fleets. This will further motivate leading vehicle manufacturers to undertake this switch.

3. How is this scheme going to be implemented?

FAME II is to be implemented in a three-fold manner. Following are the verticals and the breakdown of the funds to be allocated :

A. Demand Incentives -Rs. 8596 Cr
B. Establishment of a network of charging stations- Rs. 1000Cr
C. Administration of the scheme including publicity, IEC (Information, Education and Communication) activities. – Rs. 38 Cr

4. What are Demand Incentives and who is eligible to receive them?

These are financial incentives which are aimed at the end-user/ buyer directly, by reducing the cost of acquisition of the EVs. This will increase the adoption of electric and hybrid vehicles as the demand incentive will be available as an upfront reduced price. This price will be reimbursed by the Government of India to the OEMs concerned.

For a vehicle to be eligible for these Demand Incentives, it must belong to the following categories:

A. Buses (only Electric Vehicle technology)
B. Four Wheeler (Electric Vehicles (EV), Plug in Hybrid (PHEV) and Strong Hybrid (SHEV)).
C. Three Wheelers (Electric) including registered E-Rickshaws
D. Two Wheelers (Electric)

5.Does the scheme provide for the development of charging infrastructure?

The Rs. 10,000 crore scheme comprises of Rs. 1000 crore for development of charging infrastructure and facilities for EVs. These stations will receive investments not just from the Centre, but PSUs and private entities too. The aim is to build a network of around 2700 charging stations across India, including stations in major highway clusters and popular roadways.

Interlinking of renewable energy sources with the charging infrastructure, smart grids, use of ICT etc will also be encouraged under this scheme.

FAME II is a welcome move for the fast-evolving electric mobility revolution in India. This incentive is not just a boon for EV manufacturers and dealers, but for encouraging R&D and investments in building an electric mobility ecosystem.

At ION Energy, we’re immensely excited to see what the all-electric future holds. We look forward to partnering with individuals and companies sharing this vision and help them ride this wave of change.

Reach to us on hello@ionenergy.co if you need help in building a world-class battery for your EV Project!

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