India could soon announce a new policy to accelerate its auto industry’s adoption of electric vehicles. According to a Times of India report, the new scheme—called FAME II (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India)—could involve a financial support of Rs 9,381 crore for five years to promote electric vehicles for public transport, commercial purposes, and high-speed two-wheelers. To understand the expectations automakers have on the policy, Fortune India spoke to Sohinder Gill, CEO, Hero Electric, and director of corporate affairs at Society of Manufacturers of Electric Vehicles. Excerpts from the interview:
What should be the government’s focus on the new FAME policy?
The learning from FAME I should be the basis of formation of FAME II. Last 1.5 years were just an extension of FAME I. We should look for products and technologies which are readily available and which can be easily implemented, and, most importantly, the ones which have maximum impact on environmental crude oil consumption. Only 1,200 electric cars, some-300 odd buses, and 54,000 two-wheelers were sold last year. With these types of volumes which business will invest in local manufacturing? Unless there is a fair amount of volume created, you cannot expect a remarkable change.
Two-wheelers are seen as the lowest hanging fruit. Does it make sense for the government to prioritise that?
Two-wheelers need minimum subsidies, and the corresponding vehicles in the section are really polluting quite a bit on a per km basis. So, there is a maximum impact on the environment and the easiest to implement because there already are users and products available. The biggest advantage is that charging infrastructure is not an issue for two-wheelers. It can be charged like a mobile phone as it has small, portable batteries. So it makes a lot of sense for customers to switch to electric two-wheelers immediately.
What are your recommendations to the government?
Cab aggregators like Ola and Uber should be electric. The government and the industry should together pitch 50% contribution and make electric two-wheelers so that its price is same as any petrol two-wheeler. If customers will have a choice of same price and quality, imagine how many electric two-wheelers will be on the road? When the minimum volume is achieved, others will start buying and component makers will start pitching it. Somewhere you have to take radical steps.
What are your expectations from the new policy?
Hybrids are expected to come back. Electric personal vehicles will need another four years because it is heavily dependent on the charging infrastructure. The government can also mandate that e-commerce sites use electric scooters and motorcycles. Even if we do 25% in four years, we could achieve 4,00,000 vehicles per year.