Government accelerates support for electric vehicle sector

The government plans to accelerate three major schemes within the first 100 days to support electric vehicle adoption, local battery production, and electric bus procurement

July 5, 2024

A payment security mechanism will provide interest-free capital to automakers in case of default by state transport undertakings, facilitating widespread procurement of electric buses

The third phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME 3) will be introduced with an outlay of INR 10,000 crore

The new scheme aims to subsidise the purchase of more electric buses, building on the 7,000 buses incentivised under FAME 2

India has partnered with the United States to establish a US$ 390 million fund to deploy 10,000 e-buses

The electric vehicle sector in India is set for a significant policy boost as the government plans to fast-track three major schemes to support EV adoption and manufacturing, local battery production, and the procurement of electric buses by public transport networks within the first hundred days in office. These initiatives are part of the government’s agenda to accelerate the transition towards clean mobility and achieve net-zero objectives.

A senior official informed that the government would approve the award of 10 GWh capacity under the PLI ACC scheme to establish local units for advanced battery production. This tender, with a budgetary outlay of INR 3,620 crore, aims to reduce the costs of electric vehicles. Notable participants in the pre-bid consultation include Reliance Industries and JSW Neo Energies.

On the demand side, the third edition of the FAME scheme, with a proposed outlay of INR 10,000 crore, is expected to be announced in the upcoming budget. Unlike its predecessors, FAME 3 will be valid for a shorter duration of two years and will incentivise buyers of two-wheelers, three-wheelers, and electric buses.

To further boost the deployment of electric buses, the government will introduce a payment security mechanism to provide interest-free capital to automakers in case of payment defaults by state transport undertakings. This initiative is part of a broader strategy to increase the number of subsidised electric buses, building on the 7,000 buses incentivised under FAME 2.

In collaboration with the United States, India has established a US$390 million fund to deploy 10,000 e-buses. Mid-term plans include expanding the payment security fund to US$10 billion for non-recourse lending to e-bus makers, targeting the deployment of 38,000 buses. Replacing diesel buses with electric ones is a government priority due to their significant social and environmental impact.

Source: Economic Times

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