The Government of India announced that it will provide up to ₹1.05 billion (~$16.2 million) in grant funding to Smart Cities for the purchase of electric vehicles to be used for mass transportation under a pilot project run under the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME) program.

The Department of Heavy Industry within the Ministry of Heavy Industries and Public Enterprises, Government of India, has issued a notice inviting expressions of interest (EoI) from state government departments, undertakings, municipal corporations, and public authorities for innovative proposals that involve multi-modal public transportation based on a purely electric powertrain.

According to the agency, the pilot project is designed to give a push to multi-modal public transportation. Cities with populations greater than 1 million are allowed to participate.

The total funding amount provided to each selected city in the current FY 2017-18 could rise as high as₹1.05 billion (~$16.2 million). The funds can be used on a composite basket of electric buses (with a maximum of 100 per city), electric four-wheeler (4-W) passenger cars, and electric three wheelers (3-W).

Under the project, subsidies for electric 4-W passenger cars and electric 3-Ws will be given at the time when supply orders are placed, while subsidies for buses will be proportional to the payment released by the concerned authorities in the state against the supply order under the project.

The government will also provide funds to set up charging infrastructure in the selected cities with an upper ceiling of ₹150 million (~$2.3 million) per city.

State government departments, undertakings, municipal corporations, and public authorities of cities with more than 1 million people will be responsible for coordinating with their respective state transmission utilities, transportation authorities, and 4-W/3-W aggregators and submitting a consolidated proposal to Department of Heavy Industry.

For electric buses in which a minimum of 15 percent of the components used are from India, the government of India will cover 60 percent of the purchase cost or ₹10 million (~$0.15 million), for electric buses in which a minimum of 35 percent of the components used are from India, the government will provide 60 percent of the purchase cost or ₹15 million (~$0.23 million).

For an electric 4-W with a length that does not exceed 4 meters (m) and range of 70 kilometers (km), a grant of ₹76,000 (~$1,174) will be provided, while an electric 4-W with a length that does not exceed 4 m and range of 105 km will be provided with a grant of ₹1,24,000 (~$1,916). For an electric 4-W with a length that exceeds 4 m and a range of 70 km, a grant of ₹60,000 (~$927) will be provided, while an electric 4-W with a length that exceeds 4 m and has a range of 105 km will be eligible to receive a grant of ₹1,38,000 (~$2,132).

For an electric 3-W with a range of 50 km, a grant of ₹51,000 (~$787) will be provided, and for an electric 3-W with a range of 80 km, a ₹61,000 (~$942) grant will be provided. For an electric 3-W with a top speed that does not exceed 25km per hour (km/h) and range of 50 km, ₹37,500 (~$579) will be provided, and for an electric 3-W with a top speed that is not more than 25km/h and range of 80 km, grant of ₹45,000 (~$695) will be provided.

This program will provide a much-needed boost for India to reach its targeted goal of deploying five to seven million electric vehicles in the country by 2020 under the National Electric Mobility Mission Plan (NEMMP) 2020. The NEMMP was launched in 2013 with an investment of ~$3 billion (~₹192.8 billion) for promoting hybrid and EVs in India. But, due to a lack of action, not much has been achieved.

Businesses are now waking up to the possibilities of the EV sector in India and there has been a flurry of recent activity. In August 2017, India’s first-ever EV tender was launched by Energy Efficiency Services Limited when it announced a procurement tender for 10,000 EVs to be used by government departments and agencies.

The National Thermal Power Corporation (NTPC) is also getting in on the action by seeking a pan India license to construct and set up EV charging stations across India. Meanwhile, carmakers Maruti Suzuki and Nissan have announced plans to follow in the footsteps of Mahindra and enter India’s EV sector.

Other recent developments include a move by ACME Group to launch India’s first Battery Swapping and Charging Station for Electric Vehicles in Nagpur. Likewise, Tata Power also announced its presence in the sector by installing its first-ever EV charging station at the Tata Power receiving station in Vikhroli, Mumbai. Tata Power’s sister company, Tata Motors, is a big player in the global automobile industry. Bosch, a German firm, has also unveiled plans to start a manufacturing unit that would churn out components and parts for EV vehicles in India by 2018.

All of these announcements signal a rush of new activity in the sector and point to a huge potential for new investments.