FAME II scheme might get extra funding through a vote on account, which allows for an extension without multiple approvals like a new scheme. This approach would sustain market momentum, with next year’s budget being a vote on account due to the upcoming general elections in April-May.
The government is contemplating extending its key electric vehicle (EV) manufacturing incentive program, FAME II, into the next fiscal year. It plans to seek additional funds in the interim budget to increase its funding. As the finance ministry has not yet approved the third edition of the FAME scheme, there are discussions about prolonging the current edition until a new framework is established. Sources familiar with the matter suggest that extra funding for FAME II could be obtained through a vote on account, which would not need as many approvals as a new scheme and would keep the market momentum going. The next year’s budget is expected to be a vote on account due to the upcoming general elections in April-May.
The finance ministry is hesitant to greenlight FAME III, which would need more than INR 30,000 crore over five years to boost the use of electric two-wheelers, buses, and tractors. Officials note that major electric two-wheeler manufacturers, the primary beneficiaries of the earlier FAME schemes, may no longer need government support.
India, with three of the world’s top 10 most polluted cities, aims to enhance electric mobility adoption to lower vehicular emissions. The goal is a 30% EV share in all new vehicle sales by 2030. However, EVs currently account for only about 2% of car sales and 5% of two-wheelers. India is expected to be the third-largest auto market by 2030.
The Ministry of Heavy Industries (MHI) has already disbursed INR 5,228 crore in subsidies for approximately 1.15 million electric vehicles sold under FAME II as of December 1, 2023. Additionally, the government has allocated INR 800 crore under FAME II to state-owned OMCs like IOCL, BPCL, and HPCL to establish 7,500 fast-charging stations nationwide, aiming to alleviate range anxiety and promote EV adoption.
