Modi Govt Takes Big Foot Forward In Incentivising Electric Vehicle Production

Incentives on EV Production: The adoption of EVs in India has faced widespread challenges due to their high upfront costs compared to regular internal combustion engine vehicles. Another critical factor is customers' anxiety regarding their range. The cost of the battery is an essential factor in the overall cost of an EV.

The Ministry of Heavy Industries, recognising this, took the following steps to address the challenges faced by EV adoption in India: the cost of EVs, the charging infrastructure, and range anxiety.

Let us take a closer look at the following developments by the Ministry of Heavy Industries.

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The FAME Phase-II:

The government introduced the FAME Scheme Phase II for five years. It started in 2019 and has a total budget allocation of Rs 11,500 crore. The scheme incentivised the electric two-wheelers, three-wheelers, four-wheelers, buses, and public charging stations.

PLI Scheme for Batteries:

This government scheme, which focused on manufacturing advanced chemistry battery cells for energy storage, was introduced in May 2021 and has a budget of Rs 18,100 crore.

PLI scheme for Auto Component Industry:

Under this scheme, the government focused on enhancing India's manufacturing capabilities for Advanced Automotive Technology (AAT) products for the Automobile and Auto Component Industry. The scheme was introduced in September 2021, with a budget outlay of Rs 25,938 crore. Its main aim was to provide financial incentives to help boost the domestic production of AAT products.

PM E-Drive Scheme:

The PM E-Drive scheme aims to support the e-2W, e-3W, e-Trucks, e-buses, e-Ambulances, and EV public charging stations. Additionally, it also aims to focus on the EV testing agencies. This scheme was introduced in September 2024 with a budget outlay of Rs 10,900 crore. It is applied for two years. The Electric Mobility Promotion Scheme (EMPS) 2024, implemented for six months, from April 2024 to September 2024, is subsumed in the PM E-DRIVE Scheme.

PSM Scheme:

PSM Scheme stands for PM e-Bus Sewa-Payment Security Mechanism scheme. The scheme aims to support the deployment of more than 38,000 electric buses. It was announced in October 2024 and has a budget outlay of Rs 3,435 crore. 

Scheme for Promotion of Manufacturing of Electric Passenger Cars in India (SPMEPCI):

This scheme aims to promote the manufacturing of electric cars in India.  Under this scheme, the applicants must invest a minimum of ₹4,150 crore. This scheme was notified in March 2024.

Some other measures taken by different Ministries are as follows:

• The Ministry of Finance reduced the GST from 12 per cent to 5 per cent.
• The Ministry of Power issued guidelines and standards for EV Charging Infrastructure titled "Guidelines for Installation and Operation of Electric Vehicle Charging Infrastructure-2024." These guidelines outline standards for creating a connected and interoperable EV charging infrastructure network in the country.
• Ministry of Housing and Urban Affairs amended the Model Building Bye-Laws. It mandated the inclusion of charging stations in private and commercial buildings.
• Ministry of Road Transport & Highways (MoRTH) announced that battery-operated vehicles will be given green licence plates and exempted from permit requirements.