It is speculated that additional resources might be allocated in the next budget, subject to approval from the finance ministry. Recently, the Federation of India Chambers of Commerce and Industry’s (FICCI) submitted a proposal to the Ministry of Heavy Industry (MHI) seeking the introduction of FAME III scheme. It is estimated to require Rs 30,000 crore in the next 5 years.
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On the other hand, some government officials argue that electric 2-wheeler manufacturers, being the major beneficiaries of the scheme thus far, may not need further government support. In fact, the MHI had slashed the subsidy of Rs 15,000 per kWh for electric two-wheelers in May last year. It has been reduced to Rs 10,000 per kWh of battery capacity while the total subsidy is now capped at 15 percent of the E2W’s ex-factory price, with a maximum limit of Rs 1.50 lakh, as opposed to the previous 40 percent limit.
The government is of the view that the focus should rather shift towards investing in the ecosystem to bolster e-mobility. As of December 1, 2023, the government has disbursed Rs 5,228 crore in subsidies. While it remains to be seen if the FAME subsidy will come to its end after eight years leading to significant hike in EV prices, it cannot be ignored that the scheme has played a pivotal role in the widespread EV adoption across the country. What do you think about the idea to extend the FAME II subsidies until FY2025? Do let us know your thoughts in the comments section below.