Amidst growing anticipation and discussions surrounding the future of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, the Centre is likely to introduce FAME-III during the upcoming interim Budget. Reports suggest that the government may allocate a substantial budget ranging from INR 10,000 Crore to INR 12,000 Crore for the third phase of the scheme, aimed at incentivizing the widespread adoption of electric vehicles (EVs).
A government official, as reported by ET, stated that FAME-III will specifically target mass transport, including buses, and encourage personal mobility for two-wheelers. The scheme will also focus on promoting alternative fuel vehicles, particularly hydrogen-powered ones.
This development comes at a critical juncture when the industry is advocating for an extension of the current FAME-II scheme, scheduled to conclude on March 31, 2024, or the introduction of its successor. Despite facing challenges, FAME II has played a pivotal role in incentivizing the sale of 11.53 lakh EV units, with subsidies totaling INR 5,228 Crore as of December 1, 2023.
Launched in 2019 with a total outlay of INR 10,000 Crore, FAME-II aimed to support the adoption of EVs, including 10 lakh electric two-wheelers, 5 lakh electric three-wheelers, 7,000 electric buses, and 55,000 electric four-wheeler passenger cars through subsidies.
Faced with issues, including misappropriation of subsidies by some original equipment manufacturers (OEMs), the Ministry of Heavy Industries (MHI) reduced incentives under FAME II to 15% of the ex-factory price for two-wheeler EVs from the earlier 40%. Several fines were imposed on two-wheeler EV manufacturers for subsidy misappropriation.
According to an official cited by ET, FAME-III is expected to mirror the existing FAME-II program but with refinements to support a larger volume of vehicle sales and stricter scrutiny.
While speculation regarding the launch of FAME-III has been circulating for some time, an industry source suggested to Inc42 last month that it is improbable for the government to announce a new scheme ahead of general elections, especially when FAME-II is experiencing significant challenges.
