Tata Motors wants government to continue subsidy on electric vehicles, here’s why

Support provided by the government to promote electric and zero emission vehicles through schemes such as FAME II, need to be continued till penetration of such automobiles crosses a particular threshold with a good level of localisation, according to Tata Motors Executive Director Girish Wagh.

There is also a case to consider the extension of the FAME II scheme, which will come to an end next year and include bigger electric buses to avail of subsidy, he told PTI.

"The government has done a terrific job to promote, or more than promote I would say, ignite electric vehicle or zero emission vehicle demand. Whether it is FAME phase I, phase II, now PLI and state level incentives, a lot of policy measures, the government has really done a terrific job," he said.

Wagh further said, "So, our expectation would be that the government continues with this till the electric vehicle penetration crosses a particular threshold where there is a good level of localisation. Once you have a particular threshold on the road, the anxiety issues of the customers at large also will get addressed and then I think it will be on its own."

He was responding to queries on expectations from the upcoming Union Bugdet.

Specific to FAME II, when asked if there is a case to extend the duration of the scheme beyond next year, Wagh said, "I can speak only for my industry. So, yes, I think for buses, it is going to be very important and currently, I think it is also limited to the smaller vehicles."

Probably, there is also a case to look at some of the other categories of vehicles that are goods carrying, which otherwise are not there under the scheme, such as the medium category in the 19-20 tonne range, he added.

"If they are included in the FAME then even there, we can start seeing penetration or at least a seeding of electric vehicles," he said.

Wagh suggested that the government can have discussions with the industry and take their inputs to consider whether it makes sense to include these vehicles for subsidy under the FAME II scheme.

In 2021, the government had extended the Rs 10,000-crore FAME II scheme, which is aimed at promoting electric mobility, by two years till March 31, 2024.

The first phase of FAME scheme was initially launched in April 2015 for a period of two years with an outlay of Rs 795 crore. It was then extended to March 31, 2019 with an enhanced outlay of Rs 895 crore.

The second phase kicked off from April 1, 2019 for a period of three years with a total outlay of Rs 10,000 crore.

On the overall expectation from the Budget, Wagh said it would be the continued spend by the government on infrastructure development as it has a multiplier effect, leading to fundamental improvement in demand.