 "Finmin questions rationale for extending FAME scheme beyond current fiscal")
The Ministry of Finance has questioned the proposal to continue subsidies for electric vehicles in the country under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme beyond the current fiscal year, The Economic Times (ET) has reported. Earlier, the heavy industries ministry proposed extending the subsidies for electric vehicles (EVs) under FAME III with a higher allocation for five more years to support the growth of electric and alternate fuel vehicles.
The ET report cited government officials as saying that major electric two-wheeler manufacturers in the country that benefitted the most from FAME I and II schemes do not need any more support from the government.
The union government had allocated Rs 895 crore for FAME I, which started in 2015 and ended in 2019. The FAME II scheme began right after that in 2019, with a larger pool of funds at Rs 10,000 crore. The FAME II comes to an end in 2024.
FAME III is expected to see the allocation of even larger financial support from the government. However, as things stand, there is no clarity on the segment to be targeted, the ET report said.
A government official told The Economic Times, "There is a view in the government that the EV segment has reached a point of maturity. Besides, support is also being offered under performance-linked incentives for battery and auto component manufacturing."
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The report said that the heavy industry ministry officials are conducting discussions with finance ministry officials and will take a final decision after considering the level of penetration of electric vehicles, the support required, and the availability of funds in the country.
What is the FAME India Scheme?
The government of India came up with the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) scheme in 2015 under the National Electric Mobility Mission Plan (NEMMP) 2020. The scheme aims to promote the manufacturing of electric and hybrid vehicle technology and ensure sustainable growth through subsidies for the purchase of electric vehicles (EVs). The FAME scheme also intends to mitigate the issue of pollution and enforce the use of renewable energy sources for transportation needs.