India’s new rules, incentives to boost electric vehicle manufacturing also has a discount for buyers

India’s new rules, incentives to boost electric vehicle manufacturing also has a discount for buyers
Indian government is pushing for local manufacturing of electric
  • The government is planning to make way for local manufacturing for Electric Vehicles in India.
  • Buyers will get direct subsidies of upto ₹88 billion.
  • The incentives are expected boost demand for electric vehicles in India.
To promote domestic electric vehicle manufacturing, the Indian government is offering incentives to both ends of the automobile market – the makers and the buyer.

At least 40% of the inputs that bus manufacturers use have to be made in India. The limit will be higher at 50% for other electric vehicles such as two-wheelers, three-wheelers, cars and e-rickshaws. The proportion will be based on the on ex-factory price of the vehicles.

Complying with these norms will ensure that companies receive benefits under the 'Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II)’ scheme, reported ET. The report further mentioned that direct subsidies of upto ₹88 billion will be given to consumers to promote EVs in India.

The scheme is also expected to invest into setting up 300 new charging stations for electric/hybrid vehicle batteries, which will help “in allaying range of anxiety among consumers,” an ASSOCHAM spokesperson had told Business Insider.

The Indian government had recently approved the FAME India Phase II scheme, having set aside a budget of ₹100 billion for it. The idea behind the implementation of the scheme is to offer upfront incentive on purchase of electric vehicles and also establish a necessary charging Infrastructure for electric vehicles, according to official documents.


The benefits of the scheme will further be given only to those who use lithium ion batteries in their vehicles.

This is the second phase of incentives for electric vehicles in India and it is expected to draw around ₹3.5 billion to be invested majorly in R&D and manufacturing of batteries and its components in India.

“Part of this allocation will also go towards development of motors using rare-earth magneticmaterials and electronic control systems used in hybrid and electric vehicles,” the spokesperson said. “This is expected to lead to reduction in cost of development of hybrid vehicles and bridge the viability gap.”

According to reports under Phase 1 of the FAME scheme, which was launched in 2015, a whopping 2,65,335 electric/hybrid vehicles were given a boost through “demand creation” and steps taken under “charging infrastructure and technological support”.

However, infrastructure for electric vehicles is still in the basic stages in India, with the government still planning the installation of charging stations across the country with few successful installations. It can only hope that the second round of incentives achieve the goal.

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