Indian Economy News

The FAME scheme: Accelerating change in India’s two-wheeler industry

  • IBEF
  • April 24, 2023

The Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) scheme provides an excellent chance to encourage the adoption of electric and hybrid vehicles in India, with the ultimate goal of reducing the country's reliance on fossil fuels, reducing air pollution, and minimising the effects of climate change.

The Ministry of Heavy Industries and Public Enterprises launched the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) scheme in 2015 as part of the National Electric Mobility Mission Plan to increase the penetration of hybrid and electric vehicles (EVs) in India. With the goal of shifting at least 30% of overall transportation to EVs by 2030.

Consumers already have a favourable attitude towards and a high degree of awareness of electric mobility, which has been aided significantly by the rise in fuel and diesel prices. As a result, the FAME scheme's incentives have the potential to significantly improve the penetration and uptake of electric two-wheelers once they reach customers. The FAME initiative tackles the two main issues of customers regarding the purchase and use of two-wheeler EVs: the cost and the feasibility.

To reduce the cost of electric batteries, the government established a production-linked incentive (PLI) scheme for the development of advanced chemistry cells (ACCs) in 2021. Furthermore, the GST on electric vehicles has been decreased from 12% to 5%, while the GST on chargers/charging stations has been reduced from 18% to 5%. Together, such policies have the potential to cause a paradigm change in the ecosystem regarding the use of renewable energy, the indigenization of manufacturing, and consumer adoption of new and creative technology.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.