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Press Release

FICCI Welcomes FAME 2 amendments to accelerate EV demand

Jun 21, 2021

  • Suggests Rapid Deployment of EVS in Waste Collection through Swachh Bharat Mission and last mile deliveries by e-commerce companies

NEW DELHI, 21 June 2021: FICCI welcomes the recent notification of Department of Heavy Industry, bringing changes in the Scheme for Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME II) which is expected to accelerate demand for electric vehicle in two wheelers, three wheelers and bus segment. These actions are well aligned with the vision of promoting green mobility for the masses, and the increased deployment of electric 2W, 3W and buses will not only bring down the pollution in our cities, but also reduce cost of transport for the citizens.

Ms Sulajja Firodia Motwani, Chair, FICCI EV Committee and Founder & CEO, Kinetic Green Energy & Power Solutions Limited said, "It is a great move from the government to revise upwards the demand incentive of electric 2 wheelers from Rs 10,000 per KWh to Rs 15,000 per KWh which FICCI also has been recommending in the past. These measures will help reduce the cost of ownership difference between ICE engine vehicle and EV in two-wheeler segment and encourage consumer to adopt electric two wheelers. We also welcome the initiative to aggregate demand for buses and electric three wheelers, which will benefit the E3W designed for cargo solutions and we look forward to working with EESL, DHI and NITI Aayog to make this vision a great success. At the same time, we request the policy makers to revise upwards the demand incentive slab for electric 3-wheelers from Rs 10,000 per KWh to Rs 15,000 per KWh as well. This will help create demand for E3W for passenger movement which will greatly help in creating self-employment and reduce pollution in our cities."

The Department of Heavy Industry in its recent notification dated 11th June 2021 made the following changes in the FAME II scheme:

  • For Electric 2 Wheelers, demand Incentive will be @ Rs 15000/- per KWh as compared to Rs 10000/ per KWH earlier. The cap on incentives for Electric 2 Wheelers will be 40 percent of the cost of vehicles.
  • Aggregation will be the key method for bringing the upfront cost of 3W EV at an affordable level and at par with ICE (Internal Combustion Engine) 3-Wheelers. EESL (Energy Efficiency Services Ltd, GoI procuring body) will aggregate demand for 3 lakh Electric 3 Wheelers for multiple user segments. Details will be worked out by EESL for implementation.
  • For electric buses, 4 million plus cities (Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat, and Pune) will be targeted. EESL will go for aggregation of demand in these 9 cities for remaining E-buses under the Scheme on OPEX basis. The details shall be worked out by EESL for implementation.

With the above changes, FICCI said that the aggregation of orders/demand through EESL at national scale, of 3-wheeler will bring down its cost and eventually increase its demand too. The notification also mentions for electric buses, EESL will go for aggregation of demand in these 9 cities for remaining e-buses under the Scheme on OPEX basis. With this amendment the EV Bus segment can create the impact in the world as it did for 4-wheeler electric vehicle in the past.

FICCI has also suggested further push and support from the Central and state governments for rapid deployment of EV for waste management, last mile delivery operations of e-commerce companies and Logistics would further the cause of greening our cities:

  • Waste-Management. EVs provide an excellent alternative to ICE vehicles for the purpose of neighbourhood waste-management. This will help provide better livelihoods to garbage-collectors, and also proves to be economically more viable. FICCI requests that State Governments and Municipal corporations should be encouraged and mandated to deploy electric three wheelers for green, silent and mechanized waste collection.
  • Logistics. EVs are a great alternative to traditional ICE vehicles for last-mile deliveries and have incredibly low running costs, of 40-50 paise per Km, compared to cost of Rs. 3-4 per Km for diesel vehicles, making them extremely viable. Several fleet aggregators and e-commerce companies have stated their commitment to onboard EVs for their last-mile logistics needs. especially for e commerce and food delivery etc in the State. Push from the Central and State government would kickstart this in a major way.

FICCI appreciates the significant move taken by the government to increase the demand of electric vehicle in 2w, 3w and e-buses segment and would request that same (Rs 15,000 per KWh) demand incentive revision for electric 3-wheeler could be considered in near future.