FICCI’s Vision: FAME III Propels India Towards a Greener Future

In a strategic move towards fostering sustainable transportation and reducing carbon emissions, the Federation of Indian Chambers of Commerce and Industry (FICCI) has taken a pioneering step by submitting a comprehensive proposal for the continuation of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, aptly named FAME III. This proposal, aimed at sustaining the momentum of Electric Vehicle (EV) adoption, is not merely a bureaucratic formality but a visionary roadmap aligning with the ambitious goals set by the Government of India.

Upholding the Momentum: FICCI’s Proposal

1. Need for Price-Parity:

FICCI underscores the critical importance of enabling upfront near price-parity for Electric Vehicles compared to Internal Combustion Engine (ICE) vehicles. The proposal emphasizes that such measures are indispensable for boosting EV adoption over the next five years. Recognizing the delicate balance, FICCI calls for a continuation of the existing FAME scheme for the next five years, subject to a review at the end of three years, with the current FAME II scheduled to conclude in March 2024.

2. Impact of Withdrawal:

FICCI warns against the abrupt withdrawal or discontinuation of upfront price incentives, predicting a potential up to 25% increase in the prices of Electric Vehicles. This sharp escalation could not only impede the ongoing momentum of EV adoption but also have ripple effects, disrupting investments in the EV sector and undoing the progress achieved thus far.

3. Global Benchmarking:

Drawing inspiration from global counterparts like Canada, the United States, and Korea, FICCI advocates for the continuity of purchase incentives on Electric Vehicles. This global perspective underscores the urgency for India to stay abreast of international trends and not miss the proverbial EV bus.

The Imperative of FAME III

4. Current EV Penetration and Future Targets:

With Electric Vehicle penetration currently standing at a modest 5% in India, FICCI positions FAME III as a crucial driver to achieve the Government of India’s ambitious target of 30% EV penetration by 2030. This aligns not only with national targets but also contributes significantly to India’s broader climate action goals, including the ‘Panchamrit’ initiative and the pursuit of Net Zero.

5. FICCI’s Projections:

Leveraging insights from a diverse array of stakeholders in the EV sector, FICCI’s Electric Vehicle Committee projects that implementing the proposed demand incentives over the next five years could catalyze the adoption of a staggering 30.5 million electric vehicles across various segments. This projection aligns seamlessly with the broader goal of achieving 30% electrification of India’s transport sector.

6. Investment and Make in India:

Highlighting the symbiotic relationship between policy and industry growth, FAME’s success is evident in the surge of investments and the development of new EV models and components. FICCI underscores the importance of FAME’s emphasis on ‘Make in India,’ cautioning that a sudden discontinuation could not only reverse demand growth but also impact the strides made in the indigenous manufacturing of EV components.

7. Key Recommendations:

FICCI’s proposal encapsulates key features essential for the success of FAME III:

a. Subsidy Support: FICCI advocates for continuing subsidy support in the form of upfront incentives until EV penetration reaches a critical mass.

b. Mid-Scheme Review: A suggested mid-scheme review at the end of three years to assess penetration and recalibrate incentives.

c. Technological Inclusion: FAME III to encompass existing and upcoming green technologies, including hydrogen and fuel cells, with stakeholder input.

d. Expanded Vehicle Segments: Beyond prioritized segments, FAME III should include MHCV (trucks) and personal segments for e4Ws and private buses.

e. Incentive Calculation: Continue incentivizing based on battery size, per kWh, as per FAME II.

f. Localization: Advocate for the continuation of manufacturing clauses under the Phased Manufacturing Program (PMP) and other FAME II quality parameters.

g. Price Eligibility Criteria: Maintain maximum vehicle price eligibility criteria and incentive cap as a percentage of the vehicle price.

FICCI’s Call to Action

Ms Sulajja Firodia Motwani, Chair of the FICCI EV Committee, emphasizes the pivotal role of government initiatives like FAME-II in spurring demand and reducing upfront prices for EVs. However, she underscores that the journey has just begun, with the current price premium of EVs compared to ICE vehicles still substantial. The continuation of demand incentives through FAME III becomes imperative to bridge this gap and maintain the positive momentum in EV adoption.

Ensuring Continuity: FICCI’s Submission

FICCI has diligently submitted its proposal for FAME III to ensure the continuity of the EV growth roadmap, aligning with the government’s envisioned targets for the sector. This proposal, meticulously crafted by the FICCI EV Committee in collaboration with YES BANK as the knowledge partner, goes beyond a mere extension request. It encapsulates global strategies, lessons learned from FAME I and II, and presents a detailed framework for FAME III, including eligibility criteria, timeframe, and outlay calculation.