India Targeting Up to 7M Sales of Hybrid and Electric Vehicles by 2020

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  • The government has allocated Rs 10,000 crore for FAME II scheme to encourage EV manufacturing and adoption in India.
  • GST rate on electric vehicles reduced from 12 per cent to 5 per cent
  • No customs duty on imports of capital goods required to establish lithium cell manufacturing unit.

Under the National Electric Mobility Mission Plan (NEMMP) 2020, there is an ambitious target to achieve six to seven million sales of hybrid and electric vehicles by 2020, Union Heavy Industries and Public Enterprises Minister Arvind Sawant told the Parliament on Monday.

The NEMMP 2020 is a national mission document providing the vision and a roadmap for faster adoption of electric vehicles and their manufacturing in the country.

This plan has been designed to enhance national fuel security, to provide affordable and environmentally friendly transportation and to enable the Indian automotive industry to achieve global manufacturing leadership.

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Based on the experience from Phase-I of FAME India Scheme, it has been observed that sufficient charging infrastructure is required to achieve expected outcome of the plan, which is being addressed presently in Phase-II of FAME Scheme, the minister said in a written reply in the Rajya Sabha.

Big push for electric vehicles in budget 2019

The government has already allocated Rs 10,000 crore for Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme to encourage EV manufacturing and adoption in India.

In a move to make EVs affordable to consumers, the government has announced an additional income tax deduction of 1.5 lakh on the interest paid on loans taken to purchase electric vehicles (EV).

The government has also moved the GST council to lower the GST rate on electric vehicles from 12 per cent to 5 per cent, Finance Minister Nirmala Sitharaman said in her maiden budget speech.

In addition, she said, there will be no customs duty on imports of capital goods required to establish lithium cell manufacturing unit.

Steps taken under FAME India Scheme

As part of the NEMMP 2020, the Department of Heavy Industry formulated the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) Scheme in the year 2015 to promote manufacturing of electric and hybrid vehicle technology and to ensure sustainable growth of the same.

The Phase-I of this Scheme was initially launched for a period of two years, commencing from 1st April 2015, which was subsequently extended from time to time and the last extension was allowed up to 31st March 2019.

The 1st Phase of FAME India Scheme was implemented through four focus areas namely (i) Demand Creation, (ii) Technology Platform, (iii) Pilot Project and (iv) Charging Infrastructure.

Market creation through demand incentives was aimed at incentivizing all vehicle segments i.e. two-wheelers, three-wheelers auto, passenger 4-wheeler vehicles, light commercial vehicles and buses.

The demand incentive was available to buyers of electric & hybrid vehicle (xEV) in the form of an upfront reduced purchase price to enable wider adoption. Also, grants were sanctioned for specific projects under Pilot Projects, R&D/Technology Development and Public Charging Infrastructure components under the scheme.

In the 1st phase of scheme, about 2.78 lakh xEVs were supported with a total demand incentive of about Rs. 343 Crore. In addition, 465 buses were sanctioned to various cities/states under this scheme.

FAME II to boost charging infrastructure

Following approval of the Cabinet with an outlay of 10,000 crore for a period of 3 years, Phase-II of FAME Scheme commenced from April 1, 2019.

The main objective of FAME II is to encourage faster adoption of electric and hybrid vehicle by way of offering upfront incentive on purchase of electric vehicles and also by establishing the necessary charging infrastructure for electric vehicles.

 

 

 

 

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