Centre Considering Outlay Of INR 11K Cr For FAME-III, Sops For E-Buses & E-Rickshaws

The electric vehicle (EV) manufacturing in India is set to get a big push with the Centre reportedly considering expanding the scope of the upcoming FAME-III scheme with a proposed outlay of INR 11,000 Cr.

The government sops under the third iteration of the Faster Adoption and Manufacturing of Electric Vehicle (FAME) scheme will likely be extended to electric ambulances and police vehicles, CNBC-TV18 reported, citing government sources.

The Centre is reportedly hopeful that extension of the FAME-III subsidy scheme to newer vehicle categories such as electric buses and three-wheelers will directly benefit the public.

Further, the government is also considering additional sops for EV buyers who are willing to scrap their old internal combustion vehicles. However, a final decision is yet to be taken.  

The Centre already provides benefits such as 5% GST and road tax exemptions for electric cars. 

This comes on the heels of the announcement by union minister H. D. Kumaraswamy that the Centre will launch the FAME-III subsidy scheme within the next two months.

Pertinent to note that FAME-II, the previous edition of the demand incentive scheme for EVs, expired in April. While the EV industry was waiting for the Centre to extend the policy or introduce the FAME-III scheme, the expectations did not materialise.

However, the Ministry of Heavy Industries launched the INR 500 Cr Electric Mobility Promotion Scheme (EMPS) 2024 earlier this year. It is a stopgap scheme to incentivise the EV industry with demand subsidies before the launch of the FAME-III scheme.

While the EMPS was expected to end in July, it has been extended till September end. 

The FAME-II underwent massive turmoil last year as nearly half a dozen electric scooter makers were found in violation of the local sourcing norms that had to met to claim incentives. Companies such as Hero Electric, Okinawa Autotech, Ampere EV, Revolt Motors, Benling India, Lohia Auto and AMO Mobility were slapped with fines of crores of rupees for the violations, which led to months of mudslinging among the government and industry players.

Owing to subsidy cuts and uncertainty about the FAME scheme, Indian two-wheeler EV sales have been on the decline. The total EV two-wheeler registrations fell to 88,473 units in August from over 1.07 Lakh units registered in July, as per Vahan data.