FAME-III likely to see vehicles sporting government subsidy branding

Move aims to highlight Centre's electric mobility schemes and ensure greater transparency

After fertilisers and Covid vaccine certificates, the Centre is now looking to promote itself through electric two and three-wheelers under its flagship electric mobility schemes.

The Centre is learnt to be drafting a plan under which any electric vehicle (EV) sold under its subsidy scheme will have a ministry logo and a certificate informing the customer about the ministry and the scheme.

The government might also mandate self-KYC wherein the customer would need to upload their selfie and do Aadhaar authentication on a government portal to get the vehicle registered.

Senior officials told Business Standard that the initiative was aimed at informing the customer that “it's the government that is giving the subsidy, and not a company discount.”

They said the move follows concerns that original equipment manufacturers (OEMs) were presenting government subsidies as company-offered discounts, leaving customers unaware of the government incentives.

 This initiative was recently discussed in a meeting chaired by the Prime Minister’s Office. It was highlighted that customers purchasing electric two-wheelers (e2W), electric three-wheelers (e3W), and e-cars were unaware of the government subsidies, as OEMs were marketing vehicles at a reduced price without clarifying that the price cut was due to government incentives.

In contrast to e-buses, which bear FAME-II stickers, e2Ws and e3Ws do not have any government logo, further obscuring the source of the price reductions.

“So far, OEMs have been passing the incentives off as discounts offered by them, luring customers by first stating the actual market price of their vehicles and then providing what appeared to be special discounts. This move is aimed at ensuring greater transparency under the scheme,” a senior official familiar with the development told Business Standard.

A query sent to the Ministry of Heavy Industries (MHI) remained unanswered till press time.

To obtain the certificate, which will include details about the ministry and the scheme, customers will need to complete Aadhaar-enabled registration on either the ministry’s website or a new portal that may be launched later.

The ministry plans to hold a meeting with OEMs to inform them about the initiative, and to request their assistance in helping dealers support customers with the registration and voucher process.

 After receiving the certificate, customers would be required to take a selfie with it, which will then be uploaded to the ministry’s portal as part of the registration process. This step is intended to serve as proof that the customer received the benefits and that the voucher registration was completed by or in the presence of the customer.

“The vehicle registration will be completed once the customer submits a selfie with the voucher. This measure ensures that the customer actually received the vehicle and that the voucher registration was carried out by them or in their presence,” said another official, who requested anonymity.

The incentive funds will be disbursed directly to the OEMs’ accounts, accompanied by strict localisation requirements and other compliance guidelines.

“The funds will be provided directly to the OEMs. If any defaults occur, like those observed under FAME-II, the government will take appropriate action,” another official said.

OEMs acknowledge that introducing vouchers is a positive step but express concerns over the potential complications if the process is made difficult or if the government requires subsidy vehicles to display stickers similar to those on the e-buses.

 “The government’s intention to promote its brand is understandable, but if the process becomes cumbersome and requires stickers on all subsidised vehicles, it could lead to branding challenges for us,” said an executive from an EV manufacturer specialising in e2Ws and e3Ws.

The FAME scheme, launched in 2015 with an initial outlay of approximately Rs 900 crore, was followed by FAME II, which had its outlay increased to Rs 11,500 crore.

These schemes have been a catalyst in driving sales of EVs from less than 7,000 units in 2014-15 (FY15) to 1.5 million units in FY24, constituting 6.8 per cent of all automobile sales. However, with the conclusion of FAME II in March 2024, the industry experienced a slowdown. The government’s efforts to promote electric vehicles also led to an increase in the number of players in the industry, from 124 in FY15 to 731 in FY24.

The drill

The trigger: OEMs were presenting government incentives as their own discounts

How to get vouchers: Complete Aadhaar-enabled registration on the ministry’s website

Proof required: Customers must take a selfie with the voucher for vehicle registration

Disbursement of incentives: Funds will be sent directly to OEMs’ accounts

OEMs’ concern: Potential loss of branding if process is complicated and if mandatory stickers are introduced