Govt Boosts FAME 2 Budget By ₹1,500 Crore, Extends Benefits Till March 31

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The government announced that vehicles sold until March 31 will qualify for FAME 2 subsidies, provided funds remain available, whichever condition is met first.

The Ministry of Heavy Industries has announced an increase in the financial allocation for the second phase of the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) scheme, boosting it by ₹1,500 crore to a total of ₹11,500 crore. Initially launched in 2019 with a budget of ₹10,000 crore for a span of three years until 2022, the FAME 2 scheme has since been extended until March 2024. Its primary goal was to facilitate the adoption of 10 lakh electric two-wheelers, 5 lakh electric three-wheelers, 55,000 electric passenger cars, and 7,000 electric buses.

By January 31, the scheme had disbursed ₹5,790 crore in subsidies to electric vehicle manufacturers following the sale of 13.41 lakh electric vehicles. This figure includes 11.86 lakh two-wheelers, 1.39 lakh three-wheelers, and 16,991 four-wheelers. Additionally, the government has approved the deployment of 6,862 electric buses across various cities and state transport units for city-wide operations and has allocated ₹800 crore as a capital subsidy to oil marketing companies for establishing 7,432 public electric vehicle charging stations.

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With the updated financial plan, ₹7,048 crore is earmarked for subsidies, with two-wheelers receiving ₹5,311 crore. The funding for electric buses and the establishment of charging infrastructure has been adjusted to ₹4,048 crore in total.

The government has described the FAME II scheme as a “fund and term-limited scheme,” emphasizing that subsidies will be available for vehicles sold until March 31 or until funding is depleted, whichever comes first.

In the recent interim budget, the government allocated ₹2,671 crore for the FAME scheme for the upcoming fiscal year. Although there has been no explicit announcement regarding the extension of the FAME 2 scheme beyond March 31 or the initiation of a third phase, the budget allocation for the next year suggests ongoing support for electric vehicle incentives.

Industry stakeholders, especially those from new-age Original Equipment Manufacturers (OEMs) focusing on two-wheelers, along with industry associations, have been advocating for the continuation of subsidies past the March deadline. The demand subsidy provided by the scheme has played a crucial role in the initial adoption phase of electric vehicles within the country.

Representatives from the industry, such as Rahil Gupta, Co-founder and CTO of Hop Electric, and Uday Narang, Founder of Omega Seiki Mobility, have praised the FAME 2 scheme for significantly driving the adoption of electric vehicles nationwide. They recognize the additional capital allocation as a testament to the government’s strong commitment towards promoting green energy and sustaining the momentum of electric vehicle adoption.

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