Government To Scrap Subsidy For Private Electric Cars In Second Phase Of FAME

According to a media report, the central government is planning to scrap subsidy for private electric car owners in its new Faster Adoption and Manufacturing of hybrid and Electric vehicles or FAME 2.0. Until now, the FAME scheme granted an incentive of Rs. 1.3 lakh for buying an electric or hybrid vehicle in the country. According to government officials, the number of private electric cars plying on the roads is far too less, and hence it has decided to give cash subsidies to cab aggregators instead. The Finance Ministry will soon announce the second phase FAME scheme.

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If implemented, cab aggregators like Ola and Uber will have to convert its entire fleet into electric vehicles, which is already a mandate from the government. According to an industry expert who did not wished to be named, "The government wants to first electrify the public transport so as to create a sustainable eco-system for electric vehicles. According to them, the number of private electric car owners is far too less and hence public transport needs to be converted first. This will also help in creating awareness of the EVs and side by side, build the infrastructure as well."

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The move, however, will also deter the market from opting for electric vehicles. An SMEV official said, "Till now, people bought electric vehicles for the incentives the government offered. If you take that away, then how will you promote the use of electric vehicles in the country?"

Toyota India, however are in support with the government's decision as it will help to bring down pollution and oil prices down. A spokesperson for the Japanese carmaker said, "We think it is a fair decision from the government and we will cooperate with it. However, we do request for a coherent long term plan instead of achieving short term goals. This step will only help in reducing the pollution levels and also reduce oil prices, which will significantly help the entire industry."

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In March this year, the Government Of India announced that it will increase the budget for supporting electric vehicles to Rs. 8,730 crore under the second phase of the FAME scheme. Out of the total amount, it has allocated Rs. 5,550 crore for demand-side incentives, Rs. 2,500 crore for electric buses and Rs. 1,000 crore for electric four-wheelers. Moreover, the scheme also earmarks Rs. 600 crore as incentives on high-speed two-wheelers and Rs. 750 crore high-speed three wheeler owners.

Also Read: SIAM Proposes All New Vehicle Sales In India To Be Electric Vehicles By 2047

In a whitepaper submitted to the Indian government last year, the Society of Indian Automobile Manufacturers (SIAM) said that the proposed electrification of all vehicles by 2030 is not possible and it aims at 40 per cent of new vehicle sales to be pure electric by 2030. It also proposed that full electrification of all vehicles in the country is only possible by 2047.

Source: Times Of India