Electric vehicles and FAME-2 subsidy. If these two words have become a part of your everyday conversations, welcome to the new normal, my friend. With the introduction, adaption and growth of the country’s EV segment, there has been a rapid rise in new government policies and subsidies. Out of these, the FAME-2 subsidy has proven to be the most beneficial for customers. Just recently, the government announced further modifications. And here’s all you need to know about it.

As a key component of the FAME-2 policy, the primary focus of booster charges is to provide a financial boost to the country’s EV industry. Eventually, this modification will significantly contribute to switching ICE vehicles to electric ones. Additionally, the new EV policy will also give a second thought to the state subsidy to add FAME-2 incentives. A number of states are already on board for the rapid adoption of the same.

In February this year, the Tamil Nadu government will update their policy to give a fresh charge to its EV ecosystem. For the same, Tamil Nadu authorities have borrowed cues from the policies of Karnataka, Gujarat and Maharashtra. 

 

The policy will focus on catering to a broader range of supply-side carrots, demand-side incentives, charging infrastructure incentives and policy nudges. But, overall, the key motive is transforming the current pool of ICE vehicles into electric vehicles. 

 

Ashok Jhunjhunwala, IIT Madras professor and EV evangelist, says, "The new policy needs to emphasise subsidising the ICE vehicles."

 

Adding to it, some government sources throw light specifying that this policy will offer retrofit incentives, especially for commercial vehicles. The same will enable a more comprehensive and competitive outlook for Tamil Nadu’s EV sector.

 

In re-thinking the FAME 2 incentives, several states are already adopting to fast-track electric mobility. For example, the Tamil Nadu government has announced road tax carrots for electric vehicles for demand-side incentives. 

 

Suhas Rajkumar, founder-CEO of Simple Energy, also commented on the matter. He adds, “This is expected to expedite EV adoption and lead to the growth of the electric vehicle's ecosystem. Going further, the industry looks forward to seeing more policies to promote further development.”

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The new policy also boosts the charging infrastructure along with manufacturing benefits and demand-side incentives. For example, the government is considering the benefits of battery charging and swapping for public swapping stations. The benefits will also be extended to private charging stations of cab aggregators. 

 

Amit Gupta, business head of energy infrastructure solutions at Delta Electronics, said, “The ROI will be a problem for public charging stations as the footfalls will grow rapidly. Therefore, the charging segment's support must be tremendous if the government wants to boost EV adoption.” He also shared that Delta has already built 7,000 chargers and is now considering green charging stations with renewable energy sources. 

 

Along with this focus, the industry is also in dire need of support from makers of EV components. This will help back up what the PLI schemes are offering. 

The far-reaching implications of the policy are miraculous. The reduced GST for EV and EV components leads to better affordability and accessibility for the general public. This also increases the demand for electric vehicles and promotes growth. Financial support to manufacturers and buyers of EV components and more efforts also boost the development of this industry.

 

The new EV policy will also have better environmental implications along with financial benefits. In the long run, the rising adoption and conversion to electric vehicles will reduce the country’s dependency on fossil fuels. As a result, reducing greenhouse gas emissions to mitigate climate change effects will also be evident. 

With electrification, the road ahead sure looks greener and more promising. The announcement of the new policy and modifications is a step in the right direction. As a result of this policy, the EV industry of the country is expected to get a significant boost with growth incentives for both the supply and demand sides. 

 

Additionally, the government has taken several control measures to examine the misuse of EV subsidies and policies. To qualify, EV makers must demonstrate that at least 50% of their vehicle components are locally manufactured. The Automotive Research Association of India will also test the same, and certification for sales will be issued afterwards.