In a transformative move, the Indian government is gearing up for the third phase of the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME) scheme. With a focus on revamping the public transport system and bolstering the electric vehicle (EV) sector, the proposed FAME III plan seeks to replace 8 lakh diesel buses with electric ones over the next seven years.
The Union Ministry of Heavy Industries contemplates significant changes, including a 50% domestic value addition (DVA) requirement and the removal of the phased manufacturing program (PMP). The previous FAME II scheme, launched in 2019 with a budget of ₹10,000 crore, subsidized over 12 lakh vehicles by December 2023.
It is reported that FICCI’s proposed FAME III scheme might require an investment of over ₹30,000 crore over the next 5 years, emphasizing a substantial commitment towards e-mobility and environmental sustainability.
The government’s plan involves deploying 2,00,000 electric buses for state transport undertakings, 5,50,000 for private operators, and 50,000 for schools and employee transportation by 2030. Talks with stakeholders are underway to finalize the details, with an announcement expected in the current financial year. Currently, only around 4,000 electric buses are operational on Indian roads, indicating the scale of transformation envisaged.
However, concerns about the misuse of incentives have prompted the government to reconsider its approach. Recent investigations found six two-wheeler FAME II beneficiaries, including Hero Electric and Okinawa Autotech, violating norms and wrongly claiming subsidies worth ₹469 crore. This scrutiny has led to proposed changes, including reducing the subsidy per kilowatt-hour (kWh) of battery capacity under FAME II, while increasing the total allocation for incentives.
The 2023 success story of the Indian automobile industry, including a notable 11% increase in total sales, sets a positive backdrop for the growing share of EVs. The segment’s share has risen from 0.01% in 2014 to 6.38% in 2023, with electric two-wheelers and three-wheelers dominating the market. As India accelerates its push towards sustainable and cleaner transportation, FAME III aims to be a pivotal catalyst in this transformative journey.
