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The Prime Minister Narendra Modi-led government’s flagship electric vehicle incentive programme, faster adoption and manufacturing of electric vehicles (FAME), is gearing up for its third edition with a significant outlay of approximately Rs 10,000 crore. According to a report by The Economic Times, the scheme is expected to be rolled out within the first 100 days of the new government taking charge next month.
FAME-III will offer financial incentives for the purchase of electric two-wheelers, three-wheelers, and government-owned buses. However, a final decision on whether to extend the incentives to electric cars, including those bought by institutional buyers such as taxi aggregators, is still awaited.
The proposed FAME-III scheme is designed to follow in the footsteps of FAME-II, which ended in March 2024. It will be presented to the Union Cabinet for approval shortly after the new government assumes office in June. Under FAME-II, a 15 per cent subsidy was provided on the sale price of electric scooters.
FAME-III will continue the efforts initiated by the electric mobility promotion scheme (EMPS), which was introduced as a temporary measure when FAME-II ended on March 31.
What was the Electric Mobility Promotion Scheme (EMPS)?
EMPS, with a total allocation of Rs 500 crore, aims to support the sales of electric two-wheelers and three-wheelers until July, bridging the gap until the new scheme is in place.
Under EMPS, the government provides incentives of up to Rs 10,000 per electric two-wheeler, a reduction from Rs 22,500 under FAME-II, and up to Rs 50,000 per electric three-wheeler, down from Rs 111,505. Both categories receive incentives of Rs 5,000 per kilowatt-hour (kWh).
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EMPS aimed to support the sale of 372,215 electric vehicles, including 333,387 two-wheelers and 38,828 three-wheelers. To promote the adoption of advanced technologies, incentive benefits are only given to vehicles equipped with advanced batteries.
New guidelines to be issued under FAME-III
Initially introduced to catalyse domestic manufacturing and sales of electric vehicles through consumer demand incentives, the FAME program is poised for its third iteration. With the impending launch of FAME-III, companies aiming for incentives on EV sales will need to undergo a fresh certification process, as the government prepares to establish updated guidelines.
FAME-III is initially expected to be valid for a two-year period for sales, a change from the five-year validity under FAME-II. Under FAME-II, the government had incentivised the purchase of 7,000 electric buses. The new scheme is likely to increase this number, providing more subsidies for electric buses purchased by State Transport Undertakings (STUs).
Will electric cars be included in FAME-III?
FAME-III may exclude subsidies for electric cars, even those used for commercial purposes. The current proposal suggests offering incentives for electric cars priced below Rs 15 lakh, similar to the provisions under FAME-II. Hybrid cars might also receive support, provided they adhere to the price cap, if passenger cars are included in the scheme. Whether electric cars will be included, is a matter that is still under discussion.
