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Infrastructure Today Magazine | FICCI Recommends Extension of FAME Scheme to 2023
FICCI Recommends Extension of FAME Scheme to 2023
May 07, 2020
A large number of factors may impact the demand for electric vehicles (EV)s over the next two to three years in a significant way and these may require continued support from the government to create consumer preference towards EVs.
This was highlighted in FICCI’s Electric Vehicle Committee on April 30 under the chairmanship of Shekar Viswanathan, Vice Chairman & Whole Time Director, Toyota Kirloskar Motors and Co-Chairmanship of Sulajja Firodia Motwani, Founder & CEO, Kinetic Green.
The impact of COVID-19 could make consumers more risk averse to new technologies and higher priced vehicles, such as EVs, noted FICCI EV Committee. Further, the downward trend in fuel prices would negatively affect the cost-benefit of EVs in the medium term. Adverse impact of supply chain disruptions is also more likely on EVs than the internal combustion engine (ICE) vehicles mainly because the supply chain for EVs in India is beginning to get established, vis-a-vis a long-established supply chain for ICE.
However, propensity of change in consumer behaviour may not be the same across all segments of EVs, certain segments like two wheelers and three wheelers may not be impacted in the long term. The E-Bus segment will be affected as state transport undertakings (STU)s may not have sufficient funds for the procurement. Additionally, factors like fall in diesel prices and concern of fund availability will further impact the demand for EV buses and this may encourage STUs to buy ICE (diesel) technology buses.
To sustain the efforts made towards electrification and to attract investment, adopting technology agnostic approach would be an appropriate pathway to achieve India’s EV targets.
Shekar Viswanathan, Vice Chairman & Whole Time Director, Toyota Kirloskar Motors & Chairman, FICCI Electric Vehicle Committee said, “In the recent past, the overall auto sector hasn’t been performing well and the current COVID-19 outbreak has further exacerbated the situation. Electric mobility, which is in the nascent stage, is also not insulated from this impact. To understand the ground realities, FICCI arranged for inputs from its members for feasible recommendation to the government to ensure sustainability of EV offtake in the country as well as possible measures to attract investment for EV parts manufacturing specially in the wake of global development. We received many useful suggestions, which FICCI will be recommending to government for their consideration.”
Describing the situation as a testing time for the EV industry, Sulajja Firodia Motwani, Founder & CEO of Kinetic Green and Co-chair of FICCI EV Committee said, “EV sector has received good support from the government in last one year, and that led to a spurt in sales of EVs. It is very important that the nascent sector is supported during these challenging times in view of the long-term significance of EVs for reduction of air pollution and towards fuel security. We will be recommending extension of FAME II scheme by at least one year to 2023. We will also put our efforts to secure support electric vehicle financing from banks and non-banking financial companies (NBFC)s in a major way. To boost investments by EV component suppliers, focus on Make in India, and unwavering support by government of India to EV sector will be crucial. I am confident that the EV industry will sustain, recover and rebound from this demand downturn.”
State Transport Undertakings
Non-Banking Finance Companies
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