The following month’s budget is expected to allocate a substantial Rs 10,000 crore for the third iteration of the FAME scheme, which supports electric two-, three—, and four-wheelers.
In a recent update, the Prime Minister Narendra Modi-led government’s flagship electric vehicle incentive programme, Faster Adoption and Manufacturing of Electric Vehicles (FAME) enters its third edition with a substantial Rs 10,000 crore allocation. FAME-III extends financial incentives for the purchase of electric two, three, and four-wheelers.
Building upon the Electric Mobility Promotion Scheme (EMPS), introduced temporarily after the conclusion of FAME-II, which ended on March 31, FAME-III aims to sustain and amplify efforts to promote electric mobility. Notably, the new scheme introduces a two-year sales validity, departing from the previous five-year duration of FAME-II, marking a strategic shift in incentivizing electric vehicle adoption.
As FAME-III approaches, companies seeking incentives on EV sales will encounter a new requirement: undergoing a new certification process as the government prepares to establish updated guidelines. This shift will likely increase the number of subsidies for electric buses purchased by State Transport Undertakings (STUs).
The current proposal suggests offering incentives for electric cars priced below Rs 15 lakh, mirroring the provisions of FAME-II. Hybrid vehicles also receive support, provided they meet the price cap, pending the potential inclusion of passenger cars in the scheme.
According to a recent report by the Federation of Automobile Dealers Associations (FADA), electric three-wheeler (E3W) sales in India rose by 22.6 per cent in May 2024 compared to the same month last year, with a total of 54,729 units sold, up from 44,641 units in May 2023.
Despite this increase, industry players note stagnant electric two- and three-wheeler sales, particularly after the government ended the FAME-II subsidy scheme in March. The automotive industry eagerly awaits the announcement of FAME-III, hoping new subsidies and incentives will boost EV sales and market share.
In March, the government introduced the Rs 500 crore Electric Mobility Promotion Scheme (EMPS) 2024 to subsidise two- and three-wheelers. The Ministry of Heavy Industries states that the EMPS scheme aims to enhance green mobility and the EV manufacturing ecosystem by providing incentives up to Rs 10,000 per electric two-wheeler and up to Rs 50,000 per electric three-wheeler.
However, these subsidies are less than half of those offered under FAME-II. The EMPS scheme supports only companies with established local manufacturing capacities in India and vehicles with advanced batteries to prevent accidents.
