The Society of Manufacturers of Electric Vehicles (SMEV), the industry body for electric vehicles and EV component manufacturers in India has called upon Finance Minister Nirmala Sitharaman to either rejig the Faster Adoption and Manufacturing of Hybrid & Electric Vehicles in India (FAME) Phase II program or reintroduce FAME I, citing that the Phase II has not been able to achieve its stated target.
The Department of Heavy Industry (DHI) formulated the FAME India Scheme in the year 2015 as a part of the National Electric Mobility Mission Plan 2020 (NEMMP 2020), to promote manufacturing of electric and hybrid vehicle technology and to ensure sustainable growth of the sector. The INR 10,000-crore FAME-II scheme came into effect from April 1, 2019 and is to be implemented for a period of three years. The FAME II scheme had planned to support 10 lakh electric two-wheelers, 5 lakh three-wheelers, 55,000 four-wheelers and 7,000 buses. However, SMEV has noted that the scheme has been able to achieve less than 10 per cent of its target.
“For a nascent and disruptive industry like EV that is heavily dependent on government policies, there needs to be an effective approach that would drive the market of EVs in the country... The industry is still lagging behind the desired target," noted Sohinder Gill, SMEV Director General in a letter to Sitharaman.
He added, “our analysis shows that efforts must be made to generate demand and this can be easily done by the government's intervention relating to streamlining, ironing out policy details and adequate announcements in Budget 2021-22."
The industry body also called for a notional ''green cess'' on polluting vehicles and use it to accelerate e-mobility, while also seeking reduction of GST on EVs sold without battery. "Currently, GST on lithium battery is taxed at 28 percent when sold separately, while the vehicle sold with battery is taxed at 5 percent.
Mr Gill underscored there is a need for the policy to be completely redrafted, if needed, so that substantial investments both from within and outside India can flow into the EV sector to push the exponential growth that everyone has been expecting for some years. Or else, reintroduce the FAME I scheme which had far more success.
The industry body has also sought extension of the Phased Manufacturing Programme (PMP) stating that the pandemic has derailed the growth path of the industry, which has weakened the creation of the local component market.
"Hence, we urge the government to extend the PMP guideline for just another year so that the industry can come on track, which will automatically strengthen the local component market," Gill wrote in the letter.
He further urged for a dedicated budget for the ''Clean Air'' campaign, which could be integrated under the Swachh Bharat mission.