KOLKATA (miningweekly.com) – The second stage of the Indian government’s policy for faster adoption of electric vehicles (EVs) will see a shift from offering financial incentives for purchasing EVs, to developing domestic lithium-ion battery manufacturing capacity and vehicle charging infrastructure across the country.

The existing first stage of the policy, ‘Faster Adoption and Manufacturing of Hybrid and Electric Vehicle (FAME I)’, first introduced in 2015, is limited to offering financial incentives at point of purchase of EVs. For example, the government offers a subsidy of Rs29 000 for an electric two-wheeler and Rs130 000 for a four-wheeler EV.

The government is working towards unveiling FAME II, which will shift its focus towards developing an EV manufacturing ecosystem. The previous avatar of the policy lapsed last September after three extensions since it first came into effect in 2015.

FAME II, delayed by several months and now expected to come into play by mid-2019, with a government outlay of $127-million, is expected to address the issue of the high cost of creating EV infrastructure in a country like India, with the government targeting a charging point density of one EV charging station every 25 km.

Already expectations of increased government outlay on development of manufacturing eco-system for EVs has triggered a rush for setting up lithium-ion battery capacity in the country, with a dozen companies from South Korea, China and Taiwan announcing projects to be implemented within the next two to three years, a Heavy Industries Ministry official said.

Currently, there is no lithium-ion battery manufacturing capacity in the country and almost all requirements are met through imports from China.

It is understood that the office of the Prime Minister is insistent that FAME II focuses on facilitating investments in component manufacturing, maintaining that unless domestic lithium-ion battery manufacturing capacities are ramped up to optimal economies of scale, the high price of components will prevent the widespread adoption of EVs, despite subsidies at the point of sale.