FAME II vs. PM e-Drive: How They Are Impacting The Future of Electric Mobility?

India has undertaken various initiatives to promote cleaner, sustainable transportation as part of its broader goal to combat climate change and reduce reliance on fossil fuels.

Two significant government programs, FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles), which was launched in 2019, and the PM e-Drive scheme, which has been introduced on 11 Sep 2024, are helping to advance electric mobility in the country.

While both initiatives intend to promote EV adoption among consumers, they opt for different approaches and have significantly varied impacts. While FAME II focuses on public and shared transportation, PM e-Drive supports local manufacturing while emphasizing innovation in battery technology, and consumer incentives.

In an interaction with Abhinav Kalia, CEO and Co-founder at ARC Electric, he shed light on how FAME II and PM e-Drive are impacting the future of electric mobility?

Schemes offerings for mass EV adoption

The FAME II scheme was launched to promote electric vehicle (EV) adoption with a budget of Rs. 10,000 crore over three years. The scheme supports the deployment of 7,000 electric buses, 5 lakh electric three wheelers, 55,000 electric four wheelers, and 10 lakh electric two wheelers for private use. FAME II primarily focuses on reducing carbon emissions in public and shared transport by providing upfront demand incentives, covering 86 percent of the total budget.

In addition to incentivizing vehicle purchases, the scheme has made strides in building a robust charging infrastructure. More than 2,877 charging stations have been sanctioned in 68 cities, with an additional 1,576 stations set up along highways. This comprehensive network addresses range anxiety and promotes a more accessible EV ecosystem for mass adoption.

On the other hand, the PM e-drive initiative aims to target over 24.7 lakh electric two wheelers, 3.16 lakh electric three Wheelers, as well as 14,028 electric buses, and electric ambulances, therefore promoting inclusivity for healthcare and logistics sectors. The scheme introduces e-vouchers, streamlining the EV buying process with Aadhaar-authenticated vouchers, and simplifying consumer access to subsidies.

Additionally, Rs. 500 crore has been allocated for electric ambulances, marking a significant step toward cleaner, greener healthcare solutions. PM e-Drive aligned with India’s Aatmanirbhar Bharat initiative which will also promote domestic manufacturing.

By fostering local production of key EV components such as batteries and powertrains, the scheme reduces reliance on imports and creates employment opportunities. The scheme includes the Phased Manufacturing Program (PMP) to gradually localize EV production, strengthening India’s supply chain and driving sustainable growth in the EV sector.

Comparative Analysis: Impact on Electric Mobility

Subsidies and Incentives

FAME II has been largely focused on public and commercial vehicles, with its subsidies targeting electric buses and commercial three and four wheelers. This has led to a significant shift toward cleaner public transport, particularly in major cities. However, private buyers benefit primarily from subsidies for electric two wheelers, which are popular in urban areas.

PM e-Drive, however, extends its subsidies to a broader range of emerging EVs, such as electric ambulances and electric trucks. These incentives are expected to drive the adoption of EVs in sectors like healthcare and logistics, where the environmental and economic benefits of electric vehicles are becoming increasingly important.

By including these vehicles, the PM e-Drive scheme also helps reduce pollution from older vehicles, especially through its scrapping policy, which incentivizes the replacement of old, polluting trucks with cleaner electric trucks.

Infrastructure and Technology

FAME II’s major contribution has been in the development of charging infrastructure, which is critical for reducing range anxiety among EV users. The installation of fast chargers for two-wheelers, three wheelers, and buses is helping create a reliable network that supports EVs across major cities and highways. This infrastructure is particularly important for public transport systems, which require frequent charging to remain operational.

In contrast, PM e-Drive focuses on battery research and vehicle testing infrastructure. The initiative, which includes a commitment of Rs. 780 crore for revamping testing agencies, intends to verify that EVs satisfy safety and performance criteria.

Additionally, Rs. 2,000 crore has been dedicated to setting up charging stations, but the focus here is more on testing and improving EV technology rather than building an extensive charging network.

Local Manufacturing and Employment Generation

One of the key differentiators between the two programs is the emphasis on local manufacturing in the PM e-Drive scheme. By promoting domestic production of EV components, including batteries, the scheme is expected to create significant employment opportunities in the manufacturing sector. This not only boosts India’s economy but also strengthens its position as a global player in the EV market.

FAME II, on the other hand, has prioritized immediate adoption through subsidies and infrastructure development, with less focus on local manufacturing. However, the growth in demand for EVs spurred by FAME II are likely to create indirect employment opportunities across the EV supply chain.

Complementary Approaches for a Sustainable Future

Both FAME II and PM e-Drive is playing critical roles in advancing India’s electric mobility goals, albeit through different approaches. These programs are creating a comprehensive roadmap for the future of electric mobility in India. By addressing both the supply and demand sides of the EV market, FAME II and PM e-Drive positioned India to lead the global shift toward cleaner, more sustainable transportation solutions.

In addition to these initiatives, the industry also needs to explore new avenues for developing second-hand markets for electric vehicles. Establishing efficient resale mechanisms will not only enhance affordability but also promote a circular economy within the EV sector.

Furthermore, advancements in technology are essential for creating improved vehicle models that meet evolving consumer needs. By focusing on these complementary strategies, India can ensure a robust and sustainable future for electric mobility, ultimately making EVs more accessible and appealing to a broader audience.