FAME Out, PM E-Drive In: How the Rs 10,900 Crore Scheme Will Impact India’s EV Ecosystem

The Union heavy industries ministry implemented the Prime Minister Electric Drive Revolution in the Innovative Vehicle Enhancement Scheme (PM E-DRIVE) on October 1. Additionally, the union cabinet chaired by Prime Minister Narendra Modi has allocated Rs 10,900 crore for a period of two years for successful implementation of the scheme. The scheme will replace the existing Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME-I) and FAME-II programme. 

“This entire programme will be a big help in having sustainable growth and making sure that our country progresses rapidly on the electric vehicles movement,” said the information and broadcasting minister Ashwini Vaishnaw while addressing the media. 

The scheme will focus on promoting electric mobility along with addressing environmental pollution and ensuring sustainable transportation solutions. The scheme is on the same line as earlier Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME-I) and FAME-II programs. 

“Subsidies/demand incentives worth Rs 3,679 crore have been provided to incentivise e-2Ws, e-3Ws, e-ambulances, e-trucks, and other emerging EVs. The scheme will support 24.79 lakh e-2Ws, 3.16 lakh e-3Ws, and 14,028 e-buses,” said the ministry in a press release on September 11. 

However, the government is facing criticism for excluding electric cars from the ambit of the scheme and is likely to further slowdown the sale of electric four-wheelers. The government has provided the rationale for keeping electric four-wheelers out of the scheme as it believes that lower goods and services tax (GST) schemes for localisation of components and batteries are enough.  

Earlier, in September, addressing the criticism, the union minister for transport and highways Nitin Gadkari pointed out that the government is already doing enough to support the manufacturing and sale of electric cars. 

“My personal belief is now we don’t need too much subsidies. The GST on a petrol, diesel vehicles is 48 per cent; the GST on an electric vehicle is only 5 per cent. Still, after getting 5 per cent GST, if someone is expecting subsidy from the government, my honest opinion is now we don’t need subsidies,” said Gadkari. 

Know how the scheme will boost EV infrastructure 

The PM E-DRIVE scheme will allocate around Rs 500 crore for the deployment of e-ambulances to ensure comfortable patient transport. Nearly Rs 4,391 crore will be used to finance the procurement of 14,028 e-buses by state transport units (STUs) and public transport agencies. Under the scheme, priority will be given to those states and cities that have procured e-buses after scrapping old STU buses. The ministry is also introducing a new e-voucher system, authenticated through Aadhaar, to systematise the availability and reimbursement of demand incentives, making it more accessible to EV buyers, dealers and original equipment manufacturers.

The PM E-DRIVE scheme will further the government’s efforts to transition to a green economy, particularly in the adoption of cleaner vehicles. Earlier in September, the minister of heavy industries, H.D. Kumaraswamy, said that the union government will soon roll out the third edition of the FAME scheme. PM E-Drive scheme has replaced the existing FAME scheme. 

Earlier this year, the government approved an e-vehicle policy to promote India as a manufacturing destination for e-vehicles. The policy aims to attract foreign investments by reputed global EV manufacturers. Additionally, it will offer more choices to Indian consumers with access to the latest technology and strengthen the ‘EV ecosystem’ by promoting healthy competition among EV players. Consequently, it will lead to a high volume of production with lower costs of production.