Initially envisioned for a 3-year run ending 2022, FAME II secured an extension till March 2024, bolstering its Rs 10,000 crore commitment to EVs.
With merely two months remaining before the imminent expiration of the crucial FAME 2 incentive scheme, a high-ranking government official has provided assurance that the benefits will extend beyond March 2024. This development brings relief to manufacturers of electric two and three-wheelers, who have leveraged these incentives to offer their vehicles at more affordable prices, thereby contributing to the wider adoption of electric vehicles.
Dr Hanif Qureshi, Additional Secretary at the Ministry of Heavy Industries, emphasized the government’s responsibility to support the industry and encourage consumers to transition to zero-emission transportation. He expressed confidence that the demand incentives of the FAME scheme are likely to persist.
While FAME 3 may not be as expansive, the Additional Secretary hinted at the presence of a budget, emphasizing a focus on electric trucks as part of the government’s broader initiative to decarbonize large fleets reliant on traditional fuel sources.
Anticipating the introduction of FAME 3 in the Union Budget 2024 by Finance Minister FM Sitharaman, a senior government official confirmed that the new scheme would follow the guidelines of FAME 2. However, it would also incorporate measures to enhance the ease of doing business for Original Equipment Manufacturers (OEMs), component makers, and other stakeholders in the automotive industry.
Originally slated for three years with an outlay of Rs 10,000 crore, FAME II was extended until March 2024. The scheme primarily aims to support one million registered two-wheelers, along with three-wheelers, four-wheelers, and buses. Notably, 86 per cent of the funds are earmarked for demand incentives.
In June, the government reduced subsidies for electric two-wheelers under the scheme, citing exhaustion of funds allocated for this segment. Despite the subsidy cut, the scheme outlay for electric two-wheelers was revised to Rs 3,500 crore from Rs 2,000 crore to sustain the subsidy.
Addressing attendees at the event, Additional Secretary Qureshi underscored the urgency for testing agencies to expedite the process of awarding eligibility certificates to enterprises under the government’s PLI auto scheme. The PLI-Auto Scheme, authorized by the Union Cabinet in September 2021 with a financial outlay of Rs 25,938 crore for five years, aims to boost the manufacturing of Advanced Automotive Technology (AAT) products and promote deep localization for these products.
Three prominent OEMs—Mahindra & Mahindra, Tata Motors, and Ola Electric—have already secured eligibility certifications for incentives under the vehicle PLI scheme. Qureshi revealed that 23 other applicants are in various stages of the application process and will receive eligibility certificates in the coming weeks.
The government is also exploring initiatives to promote the electrification of goods, including plans within the FAME initiative to encourage intercity electric buses and small to medium-sized trucks used by fleet operators. This strategic move aims to reduce emissions from large-scale transportation and facilitate the transition towards electrification.