* The apparent success and the cost of the schememade government withdraw it
The Government’s plan to withdraw The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme from April, 2024 has come as a shocker to many an EV maker in the country. The scheme, launched in 2015 to promote the adoption of electric vehicles (EVs) in India, provided subsidies to manufacturers and buyers of EVs, and also offered incentives for the development of charging infrastructure.
The government has cited two reasons for the withdrawal of the scheme. First, the government believes the scheme has met its objectives. The number of EVs on the road in India has increased significantly since the scheme came into being. The government believes the EV industry is now mature enough to survive without government support.
Second, the government has cited the high cost of the FAME scheme as a reason for its withdrawal. The scheme has cost the government billions of rupees, and the government believes that this money could be better spent on other priorities.
The subsidy under the FAME scheme for fiscal 2024 has been projected at Rs 5,172 crore as compared to the revised estimate of Rs 2,897 crore for the current fiscal year.*
The scheme was a success. “The FAME scheme was a success, and had helped to increase the number of EVs on the roads in India,” said Mr Neeraj Manchanda, Founder and CEO, Zuge Electric, a multi-brand platform for EVs.
The proposed move may prove a dampener for the sector, feel some of the EV makers. “The withdrawal of the FAME scheme is a setback for the Indian EV industry. The scheme provided the much-needed support to the industry, and its withdrawal will only make it more difficult for EV manufacturers to compete with makers of petrol and diesel engine powered vehicles,” said the founder of an EV firm, on condition of anonymity.
The government still offers incentives for the purchase of EVs. For example, the government offers a tax rebate of up to Rs 1.5 lakhs on the purchase of an EV.
An illustration of the cost-advantage of an EV 2-wheeler vis-à-vis. ICE 2-wheeler:
However, Mr Neeraj Manchanda holds out a positive outlook about the future of EVs, both in India and in the global markets. He maintains that the Indian government still offers incentives for the purchase of EVs. For example, the substantial tax rebate of upto Rs 1.5 lakhs on the purchase of an EV is still on the table and augers well for the customer, if one looks through the prism of long-term savings on the EV as compared to a traditional petrol two-wheeler.
About ZUGE Electric
ZUGE Electric is India’s first multi-brand EV retail platform on the MetaVerse and Bangalore based. ZUGE has its sights firmly focused on the global EV makers, casting a wide net over critical EV ecosystem avenues and leveraging the new-age MetaVerse technology to expand reach and impact through gamifying e-commerce. ZUGE has the largest distribution network in India with over 4,500 physical dealerships and 12,000 virtual dealerships and is continuing to add to the network.