Govt unveils ₹500-cr scheme for EVs ahead of FAME expiry

The government has announced a new Electric Mobility Promotion Scheme 2024 with a total outlay of ₹500 crore for electric two-wheelers and three-wheelers.

This comes ahead of the expiry of the Faster Adoption and Manufacturing of Electric Vehicles (FAME-II) scheme on March 31, 2024.

The new scheme will run for four months from April 1, 2024 to July 31, 2024. India's expanding electric vehicle industry was seeking an extension of the FAME scheme.

The new e-mobility scheme aims to encourage faster adoption of electric two-wheeler (e-2W) and three-wheeler (e-3W) to provide further impetus to the green mobility and development of electric vehicle (EV) manufacturing ecosystem in the country.

The scheme aims to support 3,72,215 EVs including e-2W (3,33,387) and e-3W (38,828 including 13,590 rickshaws & e-carts and 25,238 e-3W in L5 category). To encourage advance technologies, the benefits of incentives, will be extended to only those vehicles which are fitted with advanced battery, the ministry of heavy industries says in a statement.

“The Scheme promotes an efficient, competitive and resilient EV manufacturing industry in the country thereby promoting the Prime Minister’s vision of Aatma-Nirbhar Bharat. For this purpose, Phased Manufacturing Programme (PMP) has been adopted which encourages domestic manufacturing and strengthening off EV supply chain. This shall also create significant employment opportunities along the value chain,” the ministry says.

With greater emphasis on providing affordable and environment friendly public transportation options for the masses, the scheme will be applicable mainly to those e-2W and e-3Ws registered for commercial purposes, the ministry says. Further, in addition to commercial use, privately or corporate owned registered e-2W will also be eligible under the scheme, it adds.

In the interim budget for 2024-25, the government slashed subsidy allocation for the FAME by 48% to ₹2,671 crore from ₹5,172 crore announced in last year's budget. The government has also revised its capital outlay on the FAME scheme to ₹4,807 crore for the ongoing financial year.

The FAME scheme's budget estimate of ₹2,671 crore for the next fiscal is 11% more than ₹2,403 crore spent on the scheme in FY23.

The subsidy cut comes at a time when electric vehicle sales in the country have surged 49.25% year-on-year to 15,29,947 units in 2023, according to data released by the Federation of Automobile Dealers' Association (FADA). The EV industry had racked up sales of 10,25,063 units in 2022. A significant majority of the total EV sales last year came from electric two-wheelers which grew 36.09% to 8,59,376 units compared with 6,31,464 units in 2022.

The government had slashed FAME-II subsidy on electric two-wheelers in June last year. The incentive on electric two-wheelers was reduced to ₹10,000 per kilowatt hour (kWh) from ₹15,000 per kWh. The cap on incentives for electric two-wheelers was cut to 15% of the ex-factory prices of vehicles against 40% earlier.