Not willing to charge for FAME 3 is the Finance Ministry

03 Nov 2023

The finance ministry has questioned the rationale behind a proposal mooting continuation of subsidy for electric vehicles in the country under Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme beyond the current fiscal year.
According to officials aware of the development, the ministry has pointed out that major electric two-wheeler makers (the largest beneficiaries of FAME I and II schemes) do not require any more government support.
The heavy industries ministry has proposed extending subsidies for EV under FAME III with a higher allocation for another five years to further push electric and alternate fuel vehicle sales.
The Centre had earmarked ?895 crore for FAME I, which was in force from 2015 to 2019. The allocation was significantly ramped up to ?10,000 crore in FAME II for the 2019-24 period.
An even higher amount is being expected for FAME III but the segments that are to be targeted have not yet been finalised.

"There is a view in the government that the EV market has reached a point of maturity. Besides, support is also being offered under performance-linked incentives for battery, and auto component manufacturing," a government official said.
The heavy industries ministry is holding discussions with the finance ministry and a final call on the proposal would be taken after taking into account the status of penetration of EVs in the country, support required and availability of funds, another official said.
As on August 1, over 753,000 electric two-wheelers (e2Ws) have been supported under the FAME II. The scheme is focused on supporting electrification of public and shared transportation through subsidies to 7,090 e-buses, 500,000 electric three-wheelers, 55,000 electric four-wheeler passenger cars and 1 million e-2Ws. Among these, sale of just buses and two-wheelers has been nearer to targets that the scheme set out to achieve.

FAME II also came under scanner after several electric two-wheeler companies were found non-compliant with the localisation clause. Seven EV companies were debarred from the programme after a government probe that initiated a claw back of wrongly claimed subsidies.
About 278,000 EVs were supported by the FAME I allocation with a total demand incentive of around ?343 crore. In addition to these, 465 buses were sanctioned to various states under this scheme.