Not EVs, PMO wants to incentivise manufacturing of lithium-ion batteries

To encourage local manufacturing of lithium-ion batteries, the Prime Minister Office (PMO) has asked the department of heavy industry to rework on the draft plan, which initially sought incentives for only electric vehicles (EVs).

PMO has asked them to come up with a plan to add local manufacturing of lithium-ion batteries to reduce their prices. The PMO was not happy with the lack of emphasis on lithium-ion batteries in the second phase of the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME) scheme, said a Mint report quoting two sources.

The PMO does not want to repeat the same mistake, it did during solar power generation push, where most of the panels were imported from different countries. It wants to focus on building infrastructure for manufacturing electric vehicles, especially batteries.

If the battery prices don’t come down, then it will be always a subsidy game, added sources.

Manufacturing will also help in generating employment.

Last week, Prime Minister Narendra Modi had interacted with over 30 CEOs of leading companies with a view to finalise the second phase of the FAME India scheme.

Four months ago, the Centre had extended the phase 1 of the FAME India scheme till September-end. The first phase of the scheme was initially proposed for two years till March 31, 2017, but later, it was extended twice for six months up to March 31, 2018.

The second phase of the FAME India scheme offering incentives for mass adoption of electric vehicles with an outlay of Rs 5,500 crore, which is about eight times more than the Rs 700 crore sanctioned in the first phase.

Currently, the incentive is being offered on purchase of strong hybrid and electric cars, two-wheelers and three-wheelers under the Faster Adoption and Manufacturing of (Strong) Hybrid and Electric vehicles in India (FAME India-I) scheme.

The govt had introduced an incentive of up to Rs 2.5 lakh for buyers of EVs. The incentive is a part of a Rs 9,400-crore package for electric and hybrid engines (electric+petrol or diesel). The incentive for e-vehicles ranges between Rs 30,000 and Rs 2.5 lakh.

The minimum of Rs 30,000 incentive goes for buyers of electric two-wheel that cost up to Rs 1.5 lakh.