Fillip for the auto Sector – Government Policy: FAME in India

Being a Civil Services aspirant, it is essential to keep yourself abreast of the latest regulations and framework. You might be aware of the Government Policy FAME i.e. Faster Adoption and Manufacturing of Hybrid and Electric Vehicles. Let’s read through to develop an understanding about this policy by the Government. Not only for the written exam, this article is useful for interviews/GD’s as well.

Government policy has for long been the supporting framework for industry in India. SOPs for the industry are granted and withdrawn depending on the need of the industry for protection against competition from organizations based abroad or the intent to build a manufacturing base in the country. ‘Make in India’ initiative, an initiative by our Prime Minister Mr. Narendra Modi, also holds the automobile industry as a sector of primary importance, the one that is to be promoted to create jobs and support manufacturing.

Auto sector significance

When the contribution of the automobile sector to the Gross Value Added or the Gross Domestic Product is considered, the share of this industry in the manufacturing sector makes it count among the top 5. If the Government policies lag behind in giving a further boost to the automobile sector, it is a move meant to add to the contribution of the manufacturing sector. The lobbying by SIAM (Society of Indian Auto Manufacturers) and the policy papers that the concerned departments, for instance the Ministry of Heavy Industries come up with, can serve as the indicator for those looking for an insight into the kind of policy framework the Government intends to build for the sector in the near future.

The Government policy that is in keeping with the international recognition for reduction in air pollution, with or without commitment for reduction in emissions over the next few decades, depending on the understanding reached through the treaties signed, is the FAME policy for the Automobile sector in India. FAME policy aims at promoting hybrid vehicles. Hybrid vehicles do not carry the disadvantages that even today act as a drag on the sale of electric vehicles and provide the convenience and mileage that come with petrol or diesel vehicles.

The policy details & the sought extension

FAME was launched as a two-year pilot project in select cities in India. Given that the hybrid vehicles segment has gained popularity from this policy and there is considerable promise and value addition for the automobile sector if more is sought for the industry, for now by a policy extension to newer cities. Launched under National Electric Mobility Mission Plan, in terms of numbers, the addition to sales has been limited, 80000 in total for the industry but it holds promise for the future. Under the scheme, incentives offered to the industry for hybrid and electric vehicles for bikes and cars amount to about Rs. 28000 for bikes, Rs. 1.38 Lakh for cars.

States that are the automobile sector hubs are Maharashtra, Tamil Nadu and Haryana. Gujarat has also emerged as the state with maximum installed capacity, the hub being at Sanand. NCAER study released on the Automobile sector lists Uttarakhand, Uttar Pradesh, Madhya Pradesh, Karnataka and Kerala as states where the sector can flourish depending on the factor under consideration, whether it is the existing infrastructure, political support, labour availability, electricity availability, ports in the vicinity or ease of transportation.

Hybrid vehicles from organizations based in Japan are sought after in developed markets. The US and European countries, having implemented emission norms that demand increasingly lower percentage of polluting gases, have inevitably created a segment in the auto sector that is only to flourish going forward. Schemes such as FAME, once implemented in other cities would also build the case for further capacity utilization and greenfield and brownfield projects in states with existing infrastructure or where there is potential in terms of some of the factors mentioned earlier. FAME is one scheme that resonates with the global manufacturing scenario. Hence, as older diesel vehicles get banned owing to increasing pollution, the hybrid ones will find more space on the roads and in the manufacturing plants.

Do share any queries or thoughts, if any.