FAME-III likely to be released on Budget day with Rs 10,000 crore outlay

The FAME scheme was initially launched in 2015 with a budget of Rs 5,172 crore, and FAME-II was introduced in 2019 with Rs 10,000 crore in budgetary support, ending March 31, 2024

The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme is set to get a third iteration during the upcoming Budget next month, the Economic Times (ET) reported.

According to sources cited by ET, this iteration, which aims to support electric two, three, and four-wheelers, may receive a budgetary allocation of about Rs 10,000 crore.

The report, citing sources, claimed that a final decision on the proposal will be made closer to the Budget presentation, considering the fiscal situation.

The proposed policy will include verification of the manufacturing capacity of companies applying for subsidies, following issues of misuse in previous versions. The FAME scheme was initially launched in 2015 with a budget of Rs 5,172 crore, and FAME-II was introduced in 2019 with Rs 10,000 crore in budgetary support, continuing until March 31, 2024.

 

Industry awaits FAME-III policy

Earlier this week, according to a 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. In total, 54,729 electric three-wheelers were sold in May 2024, up from 44,641 units in May 2023.

Despite this increase, industry players have noted 'stagnant' sales of electric two and three-wheeler vehicles, especially after the government subsidy scheme FAME-II ended in March.

“The automotive industry is eagerly looking forward to the announcement of FAME-III by the newly formed government. We believe that the introduction of new subsidies and incentives under FAME-III will provide the necessary boost to EV sales and help increase their market share significantly,” FADA President Manish Raj Singhania said.

EMPS scheme as a stop-gap measure

Meanwhile, the government introduced the Rs 500 crore Electric Mobility Promotion Scheme (EMPS) 2024 plan in March this year to subsidise two and three-wheelers. The Ministry of Heavy Industries had said that the EMPS scheme will boost the adoption of electric two-wheelers (e-2W) and electric three-wheelers (e-3W—including registered e-rickshaws and e-carts and L5) to provide “further impetus” to green mobility and the development of the electric vehicle (EV) manufacturing ecosystem in the country.

Under this scheme, incentives of up to Rs 10,000 per electric two-wheeler and up to Rs 50,000 per electric three-wheeler were provided. However, these subsidies have been reduced to less than half of what was offered under FAME-II.

Support for electric four-wheelers was completely removed under EMPS, which aimed to support the sales of 333,387 electric two-wheelers and 38,828 three-wheelers.

EMPS incentives were only available to companies with established local manufacturing capacities in India, a shift from FAME-II, which relied on a phased manufacturing programme (PMP) to progressively increase local EV production capabilities. Additionally, EMPS was only extended to vehicles equipped with advanced batteries to prevent accidents.