If Auto Inc. was expecting any big bang announcements in the Union Budget 2024, it would be disappointed. Allocations for all key automobile sector-related schemes have been kept unchanged from the interim budget which was presented in February.
These schemes include the production-linked incentive (PLI) scheme for automobiles and components, the PM-eBus Sewa Scheme, and the Electric Mobility Promotion Scheme (EMPS).
PLI Scheme
Let's look at the PLI scheme. Here, the outlay has been kept at Rs 3,500 crore. This is higher compared to Rs 484 crore in the previous financial year as the disbursement of incentives started this year.
The scheme, which incentivises companies to boost domestic manufacturing of advanced automotive technology products and attract investments in the automotive manufacturing value chain, has a total outlay of Rs 25,938 crore, to be spent till March 31, 2028.
Selected companies have invested Rs 14,043 crore till March end, while the total proposed investment is estimated at Rs 67,690 crore.
Subsidy Scheme
The government had been providing subsidies for the sale of electric vehicles under the second phase of the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) scheme. The FAME scheme expired on March 31 and was replaced by the Rs 500 crore Electric Mobility Promotion Scheme (EMPS) 2024.
The EMPS was launched for a period of four months with expiry on July 31 to provide incentives for 3.72 lakh electric two-wheelers and three-wheelers. The allocation for EMPS this year remains at Rs 500 crore. The budget document also shows an allocation of Rs 2,671 for the FAME scheme that expired in March. This is probably to settle the pending claim under that scheme.
The industry had been expecting the government to announce an extension of EMPS or a third phase of the FAME scheme in this budget. However, heavy Industries Minister of Heavy Industries Minister HD Kumaraswamy recently said FAME III is in the final stages and will not announced in this budget. He also noted that it is going to be implemented in the coming days.
Meanwhile, the allocation for the PM-eBus Sewa scheme this year remains at Rs 1,300 crore. The scheme aims to roll out 10,000 electric buses, focusing on cities with a population of less than 5 million, with financial support based on per-km for operating electric buses for 10 years.
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