As per a new government scheme issued by the Department of Heavy Industry, certain components of electric vehicles such as chargers, control units and AC units are required to be locally manufactured so that manufacturers may qualify for subsidies. The guidelines were drafted under the Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) in order to drive adoption of such vehicles.
The guidelines cover manufacturers of electric buses, four-wheelers, three-wheelers, rickshaws, and two-wheelers. While FAME was introduced in April 2015, FAME-2 was introduced in April 2019. FAME-2 will be applicable for the next 3 years.
The guidelines were introduced a few weeks after EV makers aired their concerns about low subsidies and stringent policies. The low subsidies are also the reason why the cost of electric vehicles is high. Only 10 vehicles were certified in April and 5,000 units were sold in the month of March.
The aim of FAME is to improve electric mobility in the country by increased manufacturing of components locally. The budget for the current plan is Rs.10,000 crore of which Rs.8,596 crore is allocated to reduce the retail prices of vehicles and Rs.1,000 crore for setting up charging infrastructure.
Though localisation is being encouraged, certain major battery components can be imported to save on costs and to overcome technological challenges. The import duty for import of battery packs and lithium ion cells is about 5% but it is soon to be raised so that the technology may be localised.