PM E-DRIVE Excludes Electric Cars

• 23 Sep 2024

Source: IE 

Why in News? 

The PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme excludes electric cars from any direct subsidies. 

• The government believes other measures, such as lower GST for electric cars are adequate to support the sector. 

What is the PM E-DRIVE Scheme? 

• About PM E-DRIVE Scheme: It is aimed at promoting electric mobility in India having a financial outlay of Rs 10,900 crore over two years. 
  • It has been launched to replace FAME II. 
• Scope: It offers fiscal incentives to around 25 lakh electric two-wheelers, 3 lakh electric three-wheelers, and 14,000 electric buses through demand incentives.   
  • Automakers can claim reimbursements for eligible electric vehicle (EV) sales, similar to the previous FAME-II scheme. 
  • However, electric cars are notably excluded from the subsidy. 
• Other Provisions: Installation of Electric vehicle public charging stations (EVPCS) in selected cities and on selected highways. 
  • Test agencies to be modernised to deal with the new and emerging technologies to promote green mobility.

What was the FAME Scheme? 

• The FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) policy aimed to reduce vehicular emissions, decrease fuel consumption, and encourage sustainable transportation. 
  • It was introduced in 2015 under the National Electric Mobility Mission Plan (NEMMP). 
• Key Phases: 
  • FAME I (2015-2019): Focused on providing incentives for the purchase of electric and hybrid vehicles and supported the development of charging infrastructure.  
    • It aimed to promote cleaner mobility in public and private sectors. 
  • FAME II (2019-2024): Expanded the scope, providing USD 1.19 billion to encourage the adoption of electric vehicles, particularly in public transport (e-buses, 2-wheelers, and 3-wheelers).  
    • It also emphasised building a robust charging infrastructure and targeted reducing emissions from commercial fleets. 

What are Key Facts About Promotion of Electric Cars? 

• Impact of Exclusion of Electric Cars in PM E-DRIVE: The absence of fiscal incentives following the end of FAME-II has led to a decline in electric car sales.  
  • Between April and August 2024, registrations of electric cars dropped by 9% compared to the preceding months when FAME-II was active.  
• Inadequate Charging Infrastructure: According to the Bureau of Energy Efficiency, India has approximately 25,000 public charging stations for its 46 lakh registered EVs. 
  • The current ratio of 184 EVs per charging station is much higher than in other countries actively promoting e-mobility.  
• Supporting Measures Beyond Subsidies:  
  • Production Linked Incentive (PLI) Schemes: The government is supporting the EV sector through PLI schemes for auto components and advanced cell chemistry (ACC) batteries.  
    • These incentives could help lower production costs by fostering economies of scale, especially in the EV supply chain. 
  • Lower GST and State-Level Exemptions: Electric cars continue to benefit from a lower Goods and Services Tax (GST) rate of 5%, compared to 28% on hybrid and CNG vehicles, and 49% on internal combustion engine vehicles.