Centre Likely To Unveil FAME-III Scheme During Upcoming Budget

Centre Seeks Stricter Component Localisation Norms For EVs Under FAME-III

SUMMARY

The government is likely to set aside INR 10,000 Cr-INR 12,000 Cr for the FAME-III scheme in the upcoming interim Budget

The scheme will focus on buses and two-wheelers to promote EV adoption, along with encouraging adoption of alternative fuel vehicles, like those powered by hydrogen

The FAME-II scheme has seen multiple controversies, with the government also slapping fines on two-wheeler EV manufacturers for misappropriation of subsidies

Amid the ongoing speculations around the extension of the FAME-II scheme and launch of the third phase of the scheme, the Centre is reportedly likely to unveil FAME-III to incentivise adoption of electric vehicles (EVs) in the upcoming interim Budget.

Citing a government official, ET reported that the Budget could set aside INR 10,000 Cr-INR 12,000 Cr for the FAME-III scheme.

“FAME-III will be focused on mass transport such as buses, and personal mobility for two-wheelers while also encouraging adoption of alternative fuel vehicles like hydrogen-powered ones,” the official was quoted as saying.

The development comes at a time when the industry has been calling for either an extension of the current scheme, which is scheduled to end on March 31, 2024, or the introduction of its third phase.

Despite multiple issues with the scheme, which many believe hurt the growth in the number of EVs in 2023, FAME II incentivised the sale of 11.53 Lakh units of EVs with subsidies amounting to INR 5,228 Cr till December 1 last year.

The scheme, launched in 2019 with a total outlay of INR 10,000 Cr, was slated to support 10 Lakh electric two-wheelers, 5 Lakh electric three-wheelers, 7,000 electric buses, and 55,000 electric four-wheeler passenger cars through subsidies.

The Ministry of Heavy Industries (MHI), after finding misappropriation of subsidies by some original equipment manufacturers (OEMs), last year lowered the incentive under the FAME II scheme to 15% of the ex-factory price of a two-wheeler EV from 40% earlier.

The Centre also slapped fines on a number of two-wheeler EV manufacturers, including Ampere, Hero Electric, and Okinawa, for misappropriation of subsidies.

The main bone of contention was the localisation of EV components, which most electric two-wheeler manufacturers failed to abide by.

An official told the ET that FAME-III will be much like the ongoing FAME-II programme, which has already been tweaked to support a larger number of vehicle sales and ensure stricter scrutiny.

While reports about the launch of the third phase of the scheme have been doing rounds for some time, an industry source told Inc42 last month it is highly unlikely that the government will announce a new scheme ahead of the general elections at a time when FAME-II is a major “mess”.