India delays EV charger component localization deadlines, signaling challenges in achieving FAME-II scheme goals for domestic manufacturing.
In a recent move, the Ministry of Heavy Industries in India updated the phased manufacturing program for electric vehicle (EV) public charging stations, impacting the second phase of the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India (FAME-II). The notification, dated November 7, revealed delays in localization deadlines for key EV charger components, such as the DC Energy Meter, HMI and display, charging guns, charging controllers, and power electronics and modules. Several deadlines, initially set for July 2022, have now been extended to December 2024, complicating the indigenization process for manufacturers and raising questions about their ability to find alternative domestic suppliers.
FAME-II Scheme and Local Value Addition
Under the FAME-II scheme, both EV and EV charger manufacturers are required to achieve a minimum of 50% domestic value addition to qualify for incentives. The scheme, launched to promote electric mobility and infrastructure in India, incentivizes the local production of EVs and chargers. However, the recent postponement of localization deadlines suggests challenges in meeting these stringent requirements. The move is notable given India’s ambitions to reduce dependence on imports, particularly in the face of the country’s surging demand for EVs, coupled with a limited availability of public charging infrastructure.
Tax Incentives and Challenges for Local Manufacturers
In an effort to bolster the establishment of EV charging infrastructure, India had earlier reduced the value-added tax (VAT) for chargers and charging stations from 18% to 5%. Similar tax relief measures were also extended to EVs, with VAT dropping from 12% to 5%. Despite these initiatives, the challenges in meeting localization goals for critical EV charger components highlight the complexities faced by manufacturers in finding suitable domestic suppliers. The postponement of deadlines raises concerns about the readiness of the ecosystem to support the burgeoning electric mobility landscape in India.