FAME-II Scheme Current Affairs - 2019

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FAME-II Scheme and Energy Needs

The government had introduced the FAME II scheme to boost the adoption of electric and hybrid vehicles in the country. The Confederation of Indian Industry (CII) has made the following observations about the scheme:

  • It estimates that India can save 64% of anticipated road-based mobility-related energy demand and 37% of carbon emissions in 2030 by pursuing a shared, electric, and connected mobility future.
  • This reduction in energy demand would result in the reduction of 156 million tonnes of oil equivalent (Mtoe) in diesel and petrol consumption for that year and net saving of approximately $60 billion in 2030 at present oil prices.
  • Further, this would give impetus to India’s vision of reducing oil imports by 10% by 2022.
  • The electric vehicle penetration in India is currently at just 1%, FAME alone is not enough to reach the 30% electric vehicles target by 2030.
  • CII calls for boosting of the domestic manufacturing of vehicles, components and batteries needed to be boosted, along with skill development across the value chain, and the strategic sourcing of key raw material.
  • For transport to go truly green, there must be accompanied by a rising share of renewables along with environmentally sustainable batteries.

Transport sector in India continues to be the highest oil consuming sector and the use of diesel and petrol grew at 5.9% and 9.9% respectively in the last 10 years. India’s import dependency on oil has increased from 78.3 per cent of total consumption in 2014-15 to settling at a new high of 83.7% in the 10-month period of FY19. Hence FAME scheme has multiple benefits for both the economy and environment.

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Localisation under FAME-II Scheme

The Inter-Ministerial Steering Committee of the National Mission for Transformative Mobility led by Niti Aayog chief executive officer Amitabh Kant has decided to incorporate localisation conditions to avail benefits under the FAME-II Scheme.

The Inter-Ministerial Committee of the National Mission For Transformative Mobility was formed following a cabinet decision to promote clean and sustainable mobility initiatives in the country. It consists of secretary of nine stakeholder ministries and director general of the Bureau of Indian Standards as its members.

Decision of the Inter-Ministerial Steering Committee

  • The steering committee has mandated that only companies that meet the 50% localisation threshold will be eligible for the incentives that will be available under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II) scheme to boost electric mobility as well as the ‘Make in India’ initiative.
  • The decision has been taken to ensure that the tax payer’s money is not used to subsidise imports and encourage local manufacturing.

In the discussions held with the automotive manufacturers while the two-wheeler makers have expressed their inability in meeting the criteria for 50% localisation citing their limitations, the makers of electric buses have agreed to localise.

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