March 1, 2024

Lukmaan IAS

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PARLIAMENTARY COMMITTEE’S RECOMMENDATIONS ON FAME-II SCHEME EXTENSION AND EV POLICY

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TAG: GS 3: ECONOMY

THE CONTEXT: The Parliamentary Standing Committee on Industry on December 20, 2023 recommended that the Centre should extend the deadline of the Faster Adoption & Manufacturing of Electric Vehicles (FAME) – II Scheme by at least three more years.

EXPLANATION:

  • The Faster Adoption & Manufacturing of Electric Vehicles (FAME) – II Scheme, with a budget of Rs 10,000 crore and a deadline until March 31, 2024, aims to boost the adoption of electric and hybrid vehicles in India.
  • It provides upfront incentives for purchasing electric vehicles and the development of charging infrastructure.

Committee’s Recommendations

  • Extension of FAME-II Scheme
    • The Parliamentary Standing Committee on Industry recommends extending the FAME-II Scheme by at least three years beyond its current deadline.
    • The extension aims to support more electric vehicles and bolster the transition to electric mobility.
  • Impact of Subsidy Reduction on Electric Two-Wheelers
    • Reduction of subsidies for electric two-wheelers post-June 1, 2023, has negatively impacted sales.
    • The committee advises restoring the subsidy to maintain momentum and achieve the EV penetration target by 2030.
    • Budgetary constraints led to fund reallocation and target revisions in the FAME-II Scheme.
  • Inclusion of Private Electric Four-Wheelers
    • The committee suggests expanding FAME-II to include private electric four-wheelers, subject to vehicle cost and battery capacity limitations.
    • It advocates for increased support for EVs in the four-wheelers category.
  • Government Framework and Manufacturing Support
    • To enhance India’s position as a global EV hub, the committee urges the Ministry of Heavy Industries to establish transparent, consistent government frameworks at national, state, and local levels.
    • It proposes dedicated manufacturing hubs for EV components and batteries to drive economic development.
  • Charging Infrastructure and BHEL’s Role
    • The committee recommends increasing funding for Bharat Heavy Electricals Limited (BHEL) to promote EV mobility and facilitate charging station infrastructure, including solar-based stations and battery energy storage systems.
  • Incentives for Charging Station Installation
    • To expand charging station infrastructure, the committee suggests incentivizing individual investors and encouraging public sector participation in installing charging stations at their premises.
    • Women self-help groups and cooperative societies could receive government support for opening and operating charging stations.
  • Policy Consistency and Stability
    • Frequent policy changes in the EV sector create uncertainty and impact market confidence.
    • The committee emphasizes the need for a stable and consistent national policy on electric mobility to foster a conducive environment for sustainable transportation.

Conclusion

  • The recommendations put forth by the Parliamentary Standing Committee underscore the necessity for a prolonged FAME-II Scheme to support the burgeoning electric vehicle industry.
  • The suggestions highlight various facets, including policy stability, charging infrastructure expansion, subsidy restoration, and the inclusion of private electric four-wheelers, to propel India’s shift towards cleaner and sustainable transportation.
  • The envisaged reforms aim to establish a robust ecosystem conducive to electric mobility and its seamless integration into the country’s transportation framework.

SOURCE: https://www.downtoearth.org.in/news/energy/parliamentary-panel-recommends-fame-ii-scheme-s-extension-by-at-least-3-more-years-93505

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