A lot of carmakers are making electric vehicles, and the reason is FAME

Automakers in India, whether big and small, are in a competition to build hybrids and electric cars so that they can be entitled to the advantage of tax benefits, along with the growing concerns over the quality of air breathed by millions quality in major Indian cities.

The benefits include lower excise duty on electric and hybrid cars under Faster Adoption of Manufacturing of (Hybrid &) Electric Vehicles (FAME).

Also read: There is an interesting trend building with people buying more hybrid cars

The coming three years are going to see almost a dozen electric and hybrid cars being launched from Mahindra & Mahindra (M&M), Hyundai, Toyota and Nissan, along with Maruti Suzuki India Limited, India’s biggest automaker.

M&M will be coming up with XUV mild hybrid, set to be launched in the next 6-12 months. Other than that, four-door versions E2O and KUV electric are also in the pipeline. Similarly, Hyundai is working on a hybrid version of its mid-size sedan Verna, scheduled to be launched next year, while also exploring the same technology for its upcoming SUV Tucson.

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Carmakers from across the globe are investing in this technology because their cars would be launched in the niche segment, targeted on those customers for whom price is not an issue.

Industry leader Maruti Suzuki is a leader in the hybrid market as well, using its mild hybrid technology and availing decent tax benefits with 12.5% excise duty on all electric-cum-hybrid cars, as compared with 24-27% for normal sedans.

The depleting quality of air in Indian metros has also forced automakers to launch greener vehicles in the market. For this, Volvo Auto India is planning to launch plug-in hybrids, which they say will have zero emission for the first 40 km.

"The average commute distance of most people in India would be less than 40 km per day and hence plugin hybrid car owners can contribute to the environment by exercising zero carbon footprint to their cities," Tom von Bonsdorff, MD, Volvo Auto India, told ET.

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