Centre Pushing States To Place Orders For More Ebuses To Meet FAME-II Goals

The Ministry of Heavy Industries (MHI) is reportedly pushing the state governments to place more orders for electric buses under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme to meet its target of incentivising purchase of 7,090 buses. 

The phase-II of the scheme is expected to end in 2024 and the deployment of electric buses under the scheme currently stands at only 2,232 units.

“The ministry has set a target of deploying around 3,000 buses by the end of this calendar year,” a report by Business Standard quoted a senior ministry official as saying. 

The ministry has reached out to states like Uttar Pradesh, Maharashtra, and Karnataka and has managed to get orders for 1,506 more electric buses so far, the report added.

“Our targets are not being achieved because we have to depend on state governments’ orders. They show little interest in buying electric buses. Some states like Tamil Nadu, Rajasthan, Madhya Pradesh, and Punjab have shown little interest in buying electric buses,” the official reportedly said.

The FAME-II scheme, launched in 2019 with an outlay of INR 10,000 Cr, aims to boost EV demand in the country by providing subsidies to vehicles used in public transportation and for commercial purposes.

Besides incentivising deployment of 7,090 electric buses, the scheme also aims to provide subsidies for 10 Lakh electric two-wheelers, 5 Lakh electric three-wheelers, and 55,000 electric four-wheeler passenger cars, among others.

Since the launch of the scheme, the MHI has sanctioned 6,315 electric buses to 65 cities/ state transport undertakings/ state government entities for intracity and intercity operations, as per government data. However, Union Minister Krishan Pal Gurjar informed the Lok Sabha last week that the ministry has so far secured state tenders for only 3,738 buses.

The FAME-II scheme provides a subsidy of INR 20,000 per kWh for electric buses, which is capped at 40% of the vehicle cost or INR 55 Lakh, whichever is lower.

Till December 7, 2022, the government claimed to have subsidised over 7.4 Lakh EVs in total. with subsidies of INR 3,200 Cr, under the FAME-II scheme. As per government data, Maharashtra, Karnataka, Tamil Nadu, Gujarat, Rajasthan, and Uttar Pradesh account for over 60% of the total EV sales under the FAME-II scheme.

However, hurt by the government stopping FAME-II subsidies for some major electric two-wheeler players for flouting minimum localisation requirements, the EV demand has slumped for many players, hurting the overall EV sales in the last two months. Over 10 Lakh EVs were registered across vehicle segments in India last year. This year, the number has touched almost the 1.5 Lakh mark.

The government projects the domestic EV market to grow at a compound annual growth rate (CAGR) of 49% between 2022 and 2030 to hit 1 Cr units of annual sales by 2030, creating 5 Cr direct and indirect jobs.