EV industry seeks higher incentives, FAME II scheme extension in Budget

NEW DELHI: Industry has sought an increase in the slab of incentives for electric three wheelers and electric two wheelers to Rs 20,000 per KwH of battery on board from Rs 10,000 per Kwh at present under the Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME)-II scheme. This slab is currently applicable to e-bus under the scheme.

Electric vehicle (EV) manufacturers have also asked for an extension of the scheme for two more years upto 2025 in the Budget 2021-22.

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“This can be done within the existing overall budget allocation of Rs 10,000 crore as a short term booster incentive to enhance demand, since the current offtake is very low and a higher slab will help create demand and put more EVs on the road,” industry chamber FICCI said in its budget recommendations to the finance ministry.

With an outlay of Rs 10,000 crore, the FAME-II scheme came into effect from April 1, 2019 for a period of three years. It is the expanded version of the FAME-I scheme which was launched in 2015 and seeks to support 10 lakh two-wheelers, 5 lakh three-wheelers, 55,000 four-wheelers and 7,000 buses.

The extension has been proposed on account of the fact that much time was spent in scheme implementation details and for vehicle revalidation by OEMs in 2019. The industry was hit by the Covid-19 pandemic in 2020.

Citing unutilised budget for the scheme, the industry body said: “With the FAME II policy now in implementation mode, we request extension of the FAME II scheme by two years upto 2025, to enable its impact and benefits to reach the EV buyers effectively and help in demand acceleration.”

Manufacturers have also proposed that EVs be included under Priority Lending Sector to boost financing support to them.

Referring to the requirement that all EVs under FAME are required to have lithium ion batteries, along with three year warranty on vehicle as well as the battery, Ficci suggested that this criterion can be used to protect interest of banks and lower their risk as this “adequately protects the lender throughout the loan tenor”.

They have also sought a correction in the inverted duty structure as the goods and services tax (GST) on Lithium-Ion batteries is 18% while EVs attract 5% GST and proposed a 5% tax on the batteries, same as that on EV chargers.

[Source – Economic Times]


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