FAME subsidy to continue, receives Rs 2,671 crore boost

In the interim budget announced today, the government has allocated Rs 2,671 crore for the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) scheme for the current financial year. As per the budget documents, the revised estimate of allocation for the FAME scheme in the next financial year is Rs 4,807 crore, down from the earlier budget estimate of Rs 5,172 crore.

While there has been no specific announcement regarding the extension of the FAME II scheme beyond March 31, or even a third leg to the scheme, the allocation for the next financial year indicates the government’s plans to continue with the incentives.

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Government receives proposal to extend FAME subsidy till 2029

The government rolled out the first phase of the FAME scheme in 2015, followed by the second phase in 2019. FAME I came with a budgetary outlay of Rs 895 crore, while FAME II was rolled out with a much bigger outlay of Rs 10,000 crore, for three years ending 2022. The scheme was, however, extended to March 2024 following the COVID-19 outbreak.

In the second phase of the scheme, the government targeted to support 7,000 e-buses, 5 lakh e-three-wheelers, 55,000 electric four-wheeler passenger cars (including strong hybrids), and 10 lakh electric two-wheelers.

In December 2023, the Ministry of Heavy Industries said in parliament that subsidies totalling Rs 5,294 crore had been given to EV makers for 11.80 lakh vehicles. Around 10.42 lakh two-wheelers, 1,22,690 three-wheelers, and 14,869 four-wheelers have been supported under the scheme.

Several new-age OEMs, particularly two-wheeler ones, and industry bodies have been pushing the government for an extension of the scheme. The demand subsidy given under the scheme has been instrumental in driving the early-stage adoption of electric vehicles in the country.

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‘Sudden reduction of FAME subsidy has cost us a year’s growth’: Ather CEO

Though Finance Minister, Nirmala Sitharaman, did not mention anything about the scheme in her budget speech, she said: “Our government will expand and strengthen the e-vehicle ecosystem by supporting manufacturing and charging infrastructure.” The government has allocated Rs 3,500 crore towards the production-linked incentive scheme for automobiles and components for the next financial year.

The full budget for the next financial year will be presented in July this year, once the new government is formed after the upcoming Lok Sabha elections.