FAME 3 Likely To Launch On Budget Day With INR 10k Cr Budget

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People familiar with the discussions informed that the Faster Adoption & Manufacturing of Electric Vehicles (FAME) scheme is likely to include support for electric two-wheelers, three-wheelers, and four-wheelers, with a potential budget allocation of around INR 10,000 crore.

India is poised to potentially introduce a third phase of its initiative designed to boost the adoption of electric vehicles in its upcoming budget announcement next month. This next version of the Faster Adoption & Manufacturing of Electric Vehicles (FAME) scheme is anticipated to support the purchase of electric two-wheelers, three-wheelers, and four-wheelers with a proposed budgetary provision of approximately INR 10,000 crore, according to sources close to the matter.

Senior officials engaged in the discussions indicated that the announcement of FAME III might be made when the full budget is revealed. The Ministry of Heavy Industries, responsible for managing this scheme, has already submitted a comprehensive plan to the Prime Minister’s Office for review. A final decision on this proposal is expected to be made close to the budget presentation date, taking into account the current fiscal landscape.

The continued consideration of the scheme underscores the necessity for ongoing support for electric vehicles to expand their prevalence on India’s roads. The government views green mobility as a critical component of its strategy to reduce reliance on fossil fuels, officials noted.

The forthcoming policy is set to include a requirement for verifying the actual manufacturing capacity of companies that apply for subsidies, in response to previous abuses observed in earlier phases of the scheme.

The original FAME initiative was launched in 2015, featuring a financial commitment of INR 5,172 crore. It was followed by FAME II in 2019, which was backed with a budget of INR 10,000 crore and extended until March 31, 2024.

Meanwhile, the government also rolled out the 500 crore Electric Mobility Promotion Scheme (EMPS) 2024 to offer incentives for electric two and three-wheelers. This scheme provided up to 10,000 per electric two-wheeler and up to INR 50,000 per electric three-wheeler, although these subsidies were reduced to less than half of those offered under FAME II.

Subsidies for electric four-wheelers were completely eliminated under the EMPS, which focused on supporting the sales of 333,387 electric two-wheelers and 38,828 three-wheelers. These incentives were available solely to companies that demonstrated significant local manufacturing capabilities within India. This marked a departure from the FAME II criteria, which included a phased manufacturing program designed to gradually enhance local electric vehicle production capabilities. Furthermore, the EMPS only covered vehicles equipped with advanced batteries to enhance safety standards.

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