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India is reportedly setting up a $5 Bn fund to support the adoption of electric vehicles (EVs) in the country. Proposed by government think tank NITI Aayog, the plan is currently in the works.

The US Agency for International Development (USAID) is set to provide technical assistance in setting up the fund, which is aimed at reducing the high upfront capital expenditure for EV ownership, people aware of the development told Mint. 

The plan is at a preliminary stage, as said by one of the sources to the publication.

The development comes at a time when India is increasingly strengthening its support for EV adoption through its various central and state government policies. Plans include bolstering EV charging and battery swapping infrastructure, incentives for EV manufacturers, and more. 

India’s steps in encouraging a shift from ICE vehicles also highlight Prime Minister Narendra Modi’s pledge at the COP26 summit about reaching a net-zero carbon emissions goal by 2070.

“USAID under its South Asia Regional Energy Partnership has collaborated with NITI Aayog to set up an electric vehicles financial services facility to advance electric mobility in India,” a US Embassy spokesperson was also quoted as saying.

As per the embassy, USAID’s technical assistance aims at creating enablers for EV financing. The organisation would engage with the industry and various financial institutions to help develop a conceptual framework for EV financing and create a carbon asset development methodology, taking advantage of carbon credits and monetisation, reported the publication.

The government had introduced the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles FAME India scheme in 2015 as one of the first initiatives to boost the overall EV adoption in the country. Initially launched for two years commencing from April 1, 2015, phase-I of FAME was extended till March 31, 2019. 

Under phase-II of FAME, which started on April 1, 2019, and was extended till March 31, 2024, the government allocated INR 10,000 Cr to subsidise 5 Lakh electric three-wheelers, 1 Mn electric two-wheelers, and 55,000 electric passenger vehicles, among a few other plans. It also sanctioned the setting up of 2,877 EV charging stations in 68 cities.

As per the latest statement from the Ministry of Heavy Industries, the budget utilisation under phase-II of the FAME scheme has been about INR 2,099 Cr, as of June 30 this year. Also, under the scheme, 4.7 Lakh EVs have been supported till July 15 through the demand incentive.

Moreover, out of the total EV charging sanction number, only 50 charging stations have been installed so far, as of July 1, said the ministry.

Today, there are 13.34 Lakh units of EVs running on Indian roads. Union Minister Nitin Gadkari recently said that India will have 3 Cr EVs in the next two years.