THE YEAR WAS 2015. Among the many things Arun Jaitley, then the Union Finance Minister, announced in the Budget, were two sentences on a new scheme to promote the use of electric vehicles (EVS) in India.
As beginnings go, this one was quite modest. Jaitley set aside all of ₹75 crore for the first year of the scheme, later christened Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India, or FAME. In the first phase that ended on March 31, 2019, a total of ₹895 crore was spent.
And that's when the Centre decided to raise the stakes. For the second phase, FAME II, the outlay was increased to ₹10,000 crore. It proved popular, and the government hiked the demand incentive for electric two-wheelers to ₹15,000 per kilowatt hour (kWh) of battery or up to 40 percent of the cost of an electric scooter, up from ₹10,000 per kWh. The idea was simple: The government would provide incentives to buyers in the form of an upfront reduction in the purchasing price of EVs. Till the end of December 2022, a total of 743,000 electric vehicles were incentivised, and 2,877 EV charging stations were approved under the FAME II scheme.
But this smooth ride hit a rough patch some months ago after the government received emails and letters from a whistle-blower claiming that certain EV makers were not complying with the localisation norms that were part of the scheme. An investigation was ordered by the Ministry of Heavy Industries (MHI) and violations were found. This soured the mood and put into question the extension of the scheme beyond 2024, when the current one ends.
In the immediate aftermath of the investigation, the MHI reduced the 40 percent maximum incentive cap to 15 percent for electric twowheelers (not three-wheelers and buses). It also lowered the demand incentive from ₹15,000 per kWh of battery to ₹10,000 per kWh. These amendments came into effect from June 1, 2023.
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