FAME II Requires Minimum 50 Per Cent Localization — The Catch!

The government of India insists that electric vehicle manufacturers source a minimum of 50 per cent of their components locally if they want to receive any incentive under the FAME II scheme. An inter-ministry committee led by Amithab Kant, the Chief Executive Officer at Niti Aayog, decided that if a minimum 50 per cent localization was met, only then would manufacturers be eligible of incentives under the Faster Adoption and Manufacturing of Hybrid and Electric vehicles. This move is also to push the 'Make In India' initiative.

The committee had it's first meeting on 1 April 2019, and finalized its plans to make local industries competitive on a global level.

Mr. Kant said, "Government will not use taxpayers' money to subsidize imports but will push for 50 per cent localization as we want to promote local manufacturing. We have made up our mind and would go ahead with 50 per cent localization criteria as there are several start-ups and other firms willing to do it. Money is not a constraint under the FAME II scheme. The government is committed to replenish this and will allocate more once this is utilized."

The committee had meetings and discussions with auto manufactures including Hero Motors and Bajaj Auto for two and three-wheeler electric vehicles and with Mahindra Electric and Tata Motors for electric buses. Two wheeler manufactures have said they will not be able to meet the 50 per cent localization criteria while Mahindra Electric and Tata Motors agreed that they would.

Also discussed and finalized during the committee meeting was the decision to select states and entrepreneurs to set up giga factories to manufacture cells and batteries. This is the governments 'two direction' approach to make India a key player in the global Electric Revolution. Boost domestic manufacturing by insisting on a minimum 50 per cent local products, and create size and scale to attract investments in the electric vehicle sector.

The inter-ministry committee was formed following a cabinet decision to promote clean and sustainable mobility in the country. It is made up of Secretaries of nine stakeholder ministries, and the Director General of the Bureau of Indian Standards as its member.

Thoughts About The 50 Per Cent Localization Reuirements

Fantastic idea. It is great to see the government pushing for development across the board. 

[Source—EconomicTimesAuto]

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Article Published On: Friday, April 19, 2019, 18:34 [IST]
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