Faster Adoption and Manufacturing of Hybrid and Electric vehicles in India Scheme has entered its second phase in which long-term tax holidays for domestic manufacturing and heavy duties on equipment imports are being finalized. The scheme will mandate 50% domestic content for Electric vehicles for the first year, 60% for the second year and 70% in the third year. The local content in electric vehicles currently stands at 35% as the batteries are imported which is the major cost stimulating parameter.
The Rs 8,730 crore scheme proposes fiscal and non-fiscal incentives to EV firms for five years. The non-fiscal incentives include the waiver of road tax and registration charges for electric vehicles. The fiscal incentives include tax holidays, cheaper land and power availability and duty exemptions.
FAME-II will target to make the public transport system fully electric and promote e-mobility. It will be finalized within a month. The scheme will also promote the alternate energy solutions financially. The vehicles may be for public transport, commercial purposes, and high-speed two-wheelers. The duration of incentives will span about five years.
The scheme will help domestic car makers like Tata Motors and Mahindra and Mahindra. Foreign players like BYD from China are giving tough competition to the local players. BYD also won the tender recently with some groundbreaking low bids that seemed impossible for the other players.
With about 1% market share at present, the figures are expected to grow to about 5% in coming years, according to the Society of manufacturers of Electrical Vehicles. Out of the four lakhs, electric two-wheelers on road 95% are low-speed scooters with speed of less than 25 kmph and they don’t require any registration and license. There are about few thousand electric vehicles on Indian roads.
Source: The Economic Times