In partial modification of the Scheme for Faster Adoption and Manufacturing of Electric Vehicles in India

## Report on Amendment to FAME India Phase II Scheme **1. Executive Summary:** This report analyzes an amendment to the Scheme for Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II), as notified by the Department of Heavy Industry. The amendment focuses on promoting the adoption of electric 2-wheelers (E2Ws) and 3-wheelers (E3Ws) and electric buses (Ebuses) through demand aggregation and incentives. Key changes include a demand incentive for E2Ws of Rs 15,000 per KWh, a cap on incentives for E2Ws at 40% of the vehicle cost, aggregation of demand for E3Ws by EESL, and targeting 4 million plus cities for Ebuses, with EESL managing demand aggregation on OPEX basis. These amendments aim to reduce the upfront cost of EVs and accelerate their adoption in key urban areas. **2. Introduction:** This report provides an overview and analysis of the recent amendment to the FAME India Phase II scheme, based solely on the information provided in the official notification. The purpose is to inform stakeholders about the specific changes introduced and their potential implications for the Electric Vehicle (EV) industry. **3. Policy Overview:** * This report concerns an amendment to the original policy: Scheme for Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II), notified vide S.O. No. 1300E dated 8th March 2019. * Core Objective(s) (inferred from amendment text): * To make Electric 3-Wheelers (E3Ws) more affordable by reducing the upfront cost. * To promote the adoption of Electric Buses (Ebuses) in major cities. * To incentivize the purchase of Electric 2-Wheelers (E2Ws) through demand-based incentives. **4. Background and Rationale:** The amendment suggests that the original FAME II policy required adjustments to more effectively drive EV adoption. The text indicates that upfront costs for E3Ws were a barrier and that demand aggregation could address this. Furthermore, a focus on larger cities for Ebuses suggests a strategic prioritization of areas with high pollution levels and public transportation needs. The introduction of a specific per-kWh incentive for E2Ws, coupled with a cost cap, likely seeks to boost E2W sales while ensuring efficient use of subsidy funds. **5. Key Provisions / Changes:** The following changes are introduced by the amendment: * **E3Ws:** Subparagraphs 17i and 17ii are added after paragraph 17. * **New Rule:** Aggregation will be the key method for bringing the upfront cost of 3W EV at an affordable level and at par with ICE 3Wheelers. EESL will aggregate demand for 3 lakh Electric 3 Wheelers for multiple user segments. Details will be worked out by EESL for implementation. For Electric Buses, 4 million plus cities Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat, and Pune will be targeted. EESL will go for aggregation of demand in these 9 cities for remaining Ebuses under the Scheme on OPEX basis. The details shall be worked out by EESL for implementation. * **Difference/Effect:** This provision introduces a demand aggregation strategy led by EESL, aiming to lower the initial cost of E3Ws and Ebuses to be comparable with conventional Internal Combustion Engine (ICE) vehicles. * **E2Ws:** Subparagraph 20i is added after paragraph 20. * **New Rule:** Demand Incentive will be Rs 15000 per KWh. Subparagraph 26i is added after paragraph 26. The cap on incentives for Electric 2 Wheelers will be 40 of the cost of vehicles. * **Difference/Effect:** This introduces a specific incentive structure for E2Ws, providing a direct subsidy based on battery capacity (Rs 15,000/KWh) while limiting the total incentive to 40% of the vehicle's cost. This changes the incentive mechanism for E2Ws. **6. Target Audience and Stakeholders:** Based on the text, the direct target audience and stakeholders include: * **Electric Vehicle Manufacturers (E2Ws, E3Ws, and Ebuses):** Affected by the revised incentive structure and demand aggregation strategies. * **Energy Efficiency Services Limited (EESL):** Responsible for demand aggregation for E3Ws and Ebuses. * **Consumers/Buyers of E2Ws:** Directly benefiting from the per-kWh incentive and overall cost reduction. * **Urban Transportation Providers (in the 9 targeted cities):** Potential beneficiaries of the Ebus deployment program. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** Department of Heavy Industry (issuing the amendment), Energy Efficiency Services Limited (EESL) (responsible for demand aggregation for E3Ws and Ebuses). * **Timelines/Procedures:** The amendment takes effect from the date of its publication in the Official Gazette (June 11, 2021). Specific timelines and procedures for EESL's demand aggregation efforts are to be "worked out by EESL for implementation". * **Implementation related to changes**: The incentives for E2Ws are effective immediately upon publication, though manufacturers would need to adapt pricing strategies to reflect the new incentive structure. EESL will need to develop and implement its demand aggregation strategy for E3Ws and Ebuses in the targeted cities. **8. Expected Outcomes / Impact of Changes:** The likely intended outcomes of these amendments include: * **Increased adoption of E2Ws:** The per-kWh incentive is expected to reduce the upfront cost of E2Ws, making them more attractive to consumers. * **Reduced upfront cost of E3Ws:** Demand aggregation by EESL is intended to leverage economies of scale and lower the initial purchase price of E3Ws, bringing them closer to parity with ICE counterparts. * **Accelerated deployment of Ebuses in major cities:** Focusing on the 9 largest cities will likely result in a more concentrated and impactful deployment of electric buses, addressing urban air quality and promoting sustainable transportation. * **Efficient use of subsidy funds:** The cap on E2W incentives aims to prevent excessive subsidization and ensure that the allocated funds are used effectively. **9. Conclusion:** The amendment to the FAME India Phase II scheme represents a strategic refinement of the government's approach to promoting EV adoption. By focusing on demand aggregation, targeted incentives, and strategic deployment in key urban areas, these changes aim to overcome existing barriers and accelerate the transition to electric mobility. The emphasis on EESL's role in demand aggregation highlights the importance of coordinated efforts in driving down costs and fostering a robust EV ecosystem. This amendment is significant because it directly addresses affordability concerns for E2Ws and E3Ws.

Key Entities Referenced