Govt moots FAME II extension to 2025

The extension of the second leg of the flagship incentive scheme for manufacturing electric vehicles (EVs) into the next financial year is under consideration by the government, according to media reports. It will likely seek additional resources in the interim budget to expand its corpus.

Experts said that additional funds for FAME II can be sought in a vote on account. The extension would not require multiple approvals, as needed for a fresh scheme, and would help maintain momentum in the market in the interim. The upcoming budget for next year will be a vote on account due to general elections scheduled for April-May.

According to estimates, the finance ministry is contemplating approving FAME III, which would necessitate an outlay of over INR 30,000 crore over the next five years to promote the adoption of electric two-wheelers, electric buses and tractors, among other vehicles. Experts said that major electric two-wheeler manufacturers, the primary beneficiaries of FAME I and II, no longer require government support.

India, home to three of the world’s top 10 polluted cities, has been working to encourage the adoption of electric mobility to reduce vehicular emissions. The government has set a target of a 30% share for EVs in all new vehicle sales in the country by 2030. However, the current percentage of EVs in overall vehicle sales remains low, ranging from about 2% in cars to 5% in two-wheelers. Despite this, the country is expected to become the third-largest automobile market globally by the turn of the decade.

As of December 1, 2023, the Ministry of Heavy Industries (MHI) has disbursed INR 5,228 crore in subsidies for approximately 1.15 million electric vehicles sold under FAME II. Additionally, the government has sanctioned INR 800 crore under FAME II to public sector OMCs for setting up 7,500 fast-charging stations nationwide to alleviate range anxiety and promote the adoption of EVs.

Source: Economic Times