FAME 2023 Phase-II: What is it? How it increased the sale of electric vehicles increased, and more
In its budget, India has set aside about INR Rs. 10,000 Crore for a period of 3 years for the FAME-II program, which seeks to promote clean mobility in the fiscal year 2024. The government's commitment to attaining climate action targets, lowering its reliance on fossil fuels, and minimizing energy impacts is reflected in this allocation. Market participants are now expected to meet tight localization goals as part of the scheme's stricter execution.
India is the third-largest car market in the world by sales, yet it has a very tiny number of electric vehicle owners. The FAME-II program gives incentives to lower the cost and increase the market attractiveness of electric and hybrid cars. The government is simultaneously aggressively pushing the expansion of indigenous value addition in the automobile sector and reducing reliance on imports.
FAME-II Budget
FAME-II's budgetary allotment was only used 46% of the time in FY21, but 100% of the time in FY22 and FY23. This development demonstrates India's steadfast dedication to advancing sustainable mobility and making steady progress toward its long-term carbon reduction target.
Although the Indian market for hybrid and electric cars (EVs) is still in its infancy, the government is actively attempting to create a favorable ecology. Incentives for consumers, increased charging capacity, and the phase-out of outdated, harmful cars are all included in this. A number of states, like Delhi, Kerala, and Telangana, are also making the switch to electric public transport, which is supporting the adoption of clean mobility.
Electric Vehicle Market
Since electric two-wheelers have become more popular among Indian customers, especially as a result of rising fuel prices and the impact of inflation on disposable incomes, the FAME-II plan has mostly benefitted these vehicles. Approximately 710,000 electric two-wheelers have received FAME-II subsidies by the end of 2022. The program has also authorized 2,877 charging stations and 7,210 electric buses. The FAME-II program seeks to subsidize up to 1 million electric two-wheelers as well as 7,090 electric buses.
The domestic electric vehicle (EV) industry in India is anticipated to develop at a considerable compound annual growth rate (CAGR) of 49% between 2022 and 2030, according to The Economic Survey 2023. Sales are anticipated to reach 10 million units annually by 2030. By 2030, it is anticipated that this expansion of the EV market would provide 50 million new direct and indirect job opportunities. 999,949 electric vehicles (EVs) were sold in 2022, according to data from the VAHAN site, India's e-governance program under the National Transport Project.
Ola Electric led in January's vehicle registrations with 18,220 units, followed by TVS Motor Company and Ather Energy. By the end of 2022, these businesses had established themselves as the market leaders in their respective industries, while Hero Electric, Okinawa Scooters, and other smaller firms saw their market shares drop. According to ET, Ampere saw a one percent gain while Bajaj Auto saw a modest two percent growth in market share from a low base.
There has been a modest decrease in the registration of electric two-wheelers as a result of the government's tougher rules on FAME-II subsidies. However, the implementation of production-linked incentive (PLI) programs for the production of ACC batteries, cars, and auto parts, which are in line with the objectives of FAME-II, is anticipated to draw investments worth up to INR 1 trillion. Electric cars (EVs) are expected to become more practical and appealing as production prices fall down. India surpassed Germany and Japan to become the third-largest vehicle market in the world in terms of sales as of December 2022. Manufacturers and politicians are racing to work together and shift demand in favor of greener energy choices as a result of this.
The government has recently stepped up its examination of the localization requirements for the FAME-II plan. As a result, certain electric vehicle (EV) companies are no longer eligible to receive incentives. Due to the current 100-day payment delay for FAME-II subsidies, businesses' needs for operating cash have grown. The government has been particularly keen on controlling any indirect imports through suppliers, thus getting subsidy payments has been difficult for Ather Energy and Bajaj Chetak during the past two years. According to reports, Ampere has reorganized its supply chain and presently states that its localization rate is 60%.
The government's tightening of FAME-II subsidies has led to a modest decrease in the number of electric two-wheeler registrations. However, there has been good development in the shape of production-linked incentive (PLI) programs for the industries producing ACC batteries, cars, and auto parts. These programs, which support FAME-II objectives, are anticipated to draw sizeable investments of up to INR 1 trillion. Electric cars (EVs) are predicted to become a more practical and desirable option for customers as production costs fall as a result of these incentives. India presently enjoys the amazing position of being the third-largest vehicle market in the world, surpassing both Germany and Japan, based on sales as of December 2022. Manufacturers and decision-makers are now operating in a competitive climate where they are attempting to work together and shift demand in the direction of greener energy choices. To achieve sustainability goals, the emphasis is on boosting the use of EVs and other environmentally friendly transportation solutions.
