FAME III may be Unveiled in Interim Budget
Writer Admin
India could unveil an expanded third phase of the incentive scheme for electric vehicles in the upcoming interim budget on February 1, enhancing it to support mass transport and alternative fuels, a top government official told ET.

The budget could set aside ₹10,000-12,000 crore for the third instalment of the Faster Adoption & Manufacturing of Electric Vehicles (FAME) scheme.


"FAME III will be focused on mass transport such as buses, and personal mobility for two-wheelers while also encouraging adoption of alternative fuel vehicles like hydrogen-powered ones," said a ministry of heavy industries official.

 

The scheme incentivises the sale of electric vehicles with components that are locally made as much as possible. 

The new scheme will be much like the ongoing FAME II programme, which has already been tweaked to support a larger number of vehicle sales and ensure stricter scrutiny, a second official added.

The decision to launch FAME III follows demands from the industry to continue the programme since other support mechanisms such as the production-linked incentive (PLI) scheme have exclusionary conditions such as high minimum net worth norms.

The Centre had earmarked Rs 895 crore for FAME I, which was in force from 2015 to 2019. This allocation was significantly ramped up to Rs 10,000 crore in FAME II for 2019-24.

In May 2023, incentives under the FAME II programme were lowered to Rs 10,000 per kilowatt hour and capped at 15% of an electric two-wheeler's ex-factory price.

This move was intended to ensure that the budgetary allocation for the scheme would not dry up before achieving the goals spelled out under the programme.

FAME II aimed to subsidise 1 million electric two-wheelers (E2Ws), 500,000 electric three-wheelers, 55,000 electric four-wheelers, and 7,090 electric buses. The scheme has been successful in achieving goals for E2Ws and buses. But the implementation was marred by alleged instances of companies not adhering to localisation commitments and getting subsidies under the scheme.

There were also cases of companies billing buyers for chargers and proprietary software separately to keep the E2W sale price below the Rs 1.50 lakh per unit threshold and getting subsidised for these.

 

Link