This budget could be used for the launch of the third phase of the FAME (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles in India) scheme, incentivizing green technologies for manufacturers, or supporting vehicle buyers.
“Automakers have made representations and consultations are underway with them and other stakeholders. We haven’t finalized anything yet. All options are being considered. FAME-II will continue until March 2024, so there’s no rush. Since FAME has been running for almost a decade, we need to discuss whether it’s still necessary,” said a senior government official.
Currently, the objective of the FAME program is to make electric vehicle (EV) purchases more affordable for buyers through subsidies. Additionally, there is a production-linked incentive scheme of Rs 25,938 crore aimed at boosting domestic manufacturing of advanced automotive technology products and attracting investments in the automotive manufacturing value chain.
The FAME subsidy scheme was launched by the government in 2015. If the proposed budget mentioned in the draft note is approved, it would be a five-fold increase from the current allocation of Rs 10,000 crore for the ongoing second phase. Confirming the planned budget, an official at the MHI stated, “Currently, this is a concept note. It will go to the cabinet secretary and then be discussed at the PMO (Prime Minister’s Office). The next steps will follow once it receives approval.” If approved, two-wheelers are expected to receive 42-45% of the total allocation, followed by 25-30% for buses, 8-10% for trucks, and the remaining amount for other vehicles. Some funds will also be allocated for new technologies and charging infrastructure. The government has initiated work on the third phase of FAME, which is likely to include support for hydrogen-powered vehicles, additional support for electric three-wheelers, and reduced support for two-wheelers, as reported by ET on July 21.
The union government has already disbursed Rs 4,267 crore for the sales of 872,920 EV units under the FAME-II scheme, according to data from the MHI. Out of the 872,920 incentivized units, around 775,000 were two-wheelers, followed by three-wheelers (87,570) and four-wheelers (9,597).