SUMMARY
The extension of the FAME-II scheme, earlier slated to end at the end of March 2024, will incentivise electric two- and three-wheelers till the month of July
The Ministry of Heavy Industries (MHI) has also reportedly proposed an INR 12,600 Cr FAME-III scheme to the finance ministry
The approval for FAME-III will have to wait till the formation of the new cabinet post the upcoming Lok Sabha elections
The Centre has reportedly granted a temporary four-month extension to the second phase of the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME-II) programme.
As per a CNBC TV18 report, the extension will entail an additional outlay of INR 500 Cr for the scheme.
The extension will incentivise electric two and three-wheelers till the month of July, the report said citing government sources.
Recently, an industry leader had told Inc42 that while there were clear indications of the unveiling of FAME-III, there might be a short-duration extension of the existing FAME-II scheme for another quarter or two. A full-fledged announcement of FAME-III would come only after the general elections, especially given the dent created in the EV ecosystem following the entire FAME-II fiasco in 2023.
The CNBC TV18 report said that the Ministry of Heavy Industries (MHI) recently proposed to the finance ministry the launch of the next phase of the scheme, FAME-III, with a budget of INR 12,600 Cr.
The Expenditure Finance Panel has recommended support of INR 10,000 Cr for the FAME-III scheme. Earlier, reports estimated that the government could set aside INR 10,000 Cr to INR 12,000 Cr for the FAME-III scheme in the recently passed interim budget.
However, the approval of the scheme will have to wait till the new cabinet formation post the upcoming Lok Sabha elections. The fresh INR 500 Cr is likely to get adjusted against the approved INR 10,000 Cr outlay for FAME-III, after government approval after the elections.
Introduced in 2019, FAME-II initially had a total budget of INR 10,000 Cr for supporting the adoption of EVs in India. While the industry had been requesting the Centre to extend the scheme beyond March 2024, the finance ministry recently approved an additional budget of INR 1,500 Cr for the programme.
With the additional budget allocation, the subsidies allotted under FAME-II for electric two, three, and four-wheelers were updated to INR 7,048 Cr, with a significant portion of INR 5,311 Cr earmarked specifically for electric two-wheelers.
Additionally, a separate allocation of INR 4,048 Cr was designated for the procurement of electric buses and the establishment of EV charging stations.
The second phase of the scheme was initially slated to support 10 Lakh electric two-wheelers, 5 Lakh electric three-wheelers, 7,000 electric buses, and 55,000 electric four-wheeler passenger cars through subsidies.
Union minister Krishan Pal Gurjar recently informed the Lok Sabha that over 13.63 Lakh EVs amounting to INR 5,854 Cr have been sold under the scheme till February 7, 2024.
It is also pertinent to note that the government reduced budgetary allocation on this EV demand incentive scheme by a little over 44% to INR 2,671.33 Cr for FY25.
