Electric vehicles (EVs) have long been regarded as the long-term answer to mobility in the worldwide market. Although it has caused conflict in the global car business, the shift to battery-powered mobility looks inevitable. For the past ten years, the Indian government has been a staunch supporter of this shift, with Union Minister of Transportation and Highways Nitin Gadkari at the forefront of the drive.
Gadkari has made a strong case for the Indian market to embrace EVs on a large scale and to encourage Indian OEMs to produce EVs domestically in order to lessen reliance on imports from overseas markets to meet demand. In order to encourage consumers to choose greener battery-powered automobiles over conventional fossil fuel-powered vehicles, a greater demand had to be generated.
This revolutionary journey was greatly accelerated with the introduction of the Faster Adoption of Manufacturing of Electric Vehicles (FAME) plan. FAME was started in 2015 with the goal of encouraging EV adoption in India through subsidies and incentives. Although FAME 1 gave the initial push, FAME 2.0, which debuted in 2019, significantly increased EV sales in a number of different areas.
Things did, however, take a dramatic turn earlier this year when a number of advantages offered to consumers and OEMs under the FAME 2.0 program were either decreased or eliminated entirely. A few days prior, Gadkari claimed that the fast increasing demand for EVs and alternative fuel vehicles such as CNG negated the need for the Indian government to provide subsidies to EV makers.
His claim is further supported by the favorable market conditions brought about by tax laws that are beneficial and falling battery prices. Because of this, Indian producers of EVs have achieved a level of sustainability that allows them to prosper without the need for government assistance. Does it, however, provide a clear picture?
Effects of subsidies for FAME 2.0
The incentives for electric two-wheelers, three-wheelers, and four-wheelers were further improved under FAME 2.0. Sales of EVs increased dramatically as a result, especially for two-wheelers. Enterprises such as Ola Electric, Ather Energy, and Bajaj Auto leveraged the initiative to introduce inventive and reasonably priced electric scooters that struck a chord with the Indian clientele.
But the FAME 2.0 incentives’ removal in March 2024 signaled a sea change in the Indian EV sector. Despite the government’s emphasis on the necessity of industry maturity and self-sufficiency, several stakeholders were taken aback by the abrupt pullout. Sales of EVs decreased noticeably across all segments as a direct result.
| Month | Sales |
| January | 1,45,044 |
| February | 1,41,0738 |
| March | 2,13,036 |
| April | 1,15,850 |
| May | 1,40,548 |
| June | 1,39,905 |
| July | 1,78,948 |
| August | 1,56,199 |
Other than the fact that March was the best-selling month for EVs in India across all categories and the final month of FAME 2.0 before the program underwent significant revisions, the data in the table don’t offer any compelling evidence. This suggests panic buying most likely. It is also challenging to determine whether the pullout has genuinely affected EV sales across all segments.
Can electric vehicles (EVs) survive without subsidies?
Thus, the crucial query is whether or not EVs can endure in India over the long term without subsidies. Since EVs currently hold less than 10% of the Indian market and there is still a long way to go before there is a widespread transition from
The discontinuation of FAME 2.0 has various ramifications:
Cost Increases: In the absence of subsidies, EVs came with greater upfront expenses for buyers, which made them less accessible in a market where pricing is crucial, such as India.
Demand Slump: A number of EV manufacturers saw a downturn in sales as a result of the abrupt price hike, which reduced consumer demand.
Industry Difficulties: Suppliers, providers of charging infrastructure, and makers of batteries faced difficulties as a result of the retreat in the still-developing EV ecosystem.
The Indian EV market has proven resilient in the face of adversity. A slow recovery has been facilitated by a number of factors:
State-Level Incentives: To partially counterbalance the impact of the withdrawal of FAME 2.0, some state governments have stepped in with their own EV policies and subsidies.
Growing Awareness: People are becoming more and more aware of the advantages of electric vehicles (EVs), such as lower operating costs and pollution.
Technological Developments: EVs are becoming increasingly useful and convenient due to ongoing developments in battery technology and charging infrastructure.
World EV Day: Responses from Industry
Top industry executives have shared their thoughts on the country’s EV market’s growth and future on the occasion of World EV Day. These are a few noteworthy responses from India’s auto Inc. leadership.
“World EV Day serves as a powerful reminder of how far we’ve come and the exciting future that lies ahead in green mobility,” said Manu Saxena, Senior Vice President, EV Business, TVS Motor Company. India’s advancements in “atma nirbhar” design, engineering, and supply chain excellence are putting us in a position to lead the world in electric vehicle innovation.
He went on to say that government programs like FAME and EMPS are essential for promoting the expansion of the EV industry. In addition to its strategic worldwide reach and growing charging infrastructure, India is poised to become a major center for the export of electric two-wheelers.
“At Volvo Car India, we fully embrace this vision with our C40 Recharge and XC40 Recharge cars that deliver zero tailpipe emissions and use recyclable materials to reduce environmental impact,” stated Jyoti Malhotra, Managing Director, in reference to the same.
“On World EV Day, we recognize the transformative role our auto component industry is playing in shaping India’s journey toward sustainable mobility,” stated Shradha Suri Marwah, President of ACMA India. Moving to electric cars involves a fundamentally environmentally conscious rethinking of transportation, going beyond simple technology advancements. Leading this push are India’s auto component producers, who are developing crucial breakthroughs in EV-specific parts like motors and batteries.
